AM Best Withdraws Credit Ratings of Texas’ Cadence Indemnity

AM Best has downgraded the Financial Strength Rating to B- (Fair) from B++ (Good) and the Long-Term Issuer Credit Rating to “bb-” (Fair) from “bbb+” (Good) of Texas-domiciled Cadence Indemnity Inc, a single parent captive of The Sullivan Brothers Family of Companies.

AddAM Best has placed these Credit Ratings (ratings) under review with negative implications. Concurrently, AM Best has withdrawn these public ratings of Cadence per the company’s request.

The ratings reflect Cadence’s balance sheet strength, which AM Best assesses as weak, as well as its adequate operating performance, limited business profile and marginal enterprise risk management (ERM).

The rating downgrades reflect the weakening in Cadence’s balance sheet strength, driven by a significant decline in risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and increasing underwriting leverage metrics.

In the latter half of 2025, Cadence experienced premium growth that substantially deviated from the business plans originally shared with AM Best at the time the company was initially rated in March 2025, AM Best said.

Consequently, the captive’s underwriting risk materially increased, causing a significant decline in its BCAR score. These rating actions also reflect a revision in AM Best’s assessment of Cadence’s ERM to marginal from appropriate.

The ratings will remain under review with negative implications pending additional meetings with management to evaluate Cadence’s ERM framework, including risk mitigation strategies and processes, receipt of a revised business plan, the filing of Cadence’s year-end 2025 statutory financial statements and the finalization of its year-end actuarial review.

Source: AM Best