AM Best places Pie’s credit ratings under review with negative implications
AM Best has placed under review with negative implications the financial strength rating of A- (Excellent) and the long-term issuer Credit ratings of “a-” (Excellent) of The Pie Insurance Company and its pooled affiliate, Pie Casualty Insurance Company.
This rating action follows the organization’s results in 2023, which included material underwriting losses brought on by adverse reserve development in its New York book of business. The rating agency said that although reserves have stabilized since Q3 2023, the magnitude of the development is concerning and has had an adverse impact on Pie’s risk-adjusted capital position.
In the 2023 insurance filing, the Pie Casualty Insurance Company reported a $20 million unfavorable development attributable to prior years, with $17.2 million driven by the New York portion of the book. The company has taken steps to mitigate its exposure in New York by exiting all but the payroll portion of the New York business. As a result of these measures, the company’s policy year 2023 earned premium exposure in New York now represents approximately 4% of the workers’ compensation program compared to 13% in 2022, and is comprised of a lower overall hazard mix.
Based on information we obtained, the loss ratio issue in NY was something multiple employees were aware of in 2022, and Pie’s risk appetite began to change in the fall of 2022. One focus area for Pie in NY was new ventures – new businesses with no prior coverage. We were also told that Pie promised ADP to be their trucking carrier as the payroll giant was looking for companies willing to accept the risk. Eventually, Pie pulled back which led to tensions with ADP.
Last month, Pie Insurance made cuts that impacted around 20 employees. We received the following statement from the company: “We reorganized two teams, which resulted in the elimination of some positions that were no longer needed due to the new structures. These decisions were made after identifying ways to more effectively deliver value to our partners and customers and meeting them wherever they are in their journey with Pie.”
Last May, Pie laid off 63 employees (14%) in an effort to reduce expenses by $25 million.
