AM Best Affirms Credit Ratings of Triple Crown Assurance Co.

OCTOBER 09, 2026 10:30 AM (EDT)

AM Best Affirms Credit Ratings of Triple Crown Assurance Co.

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FOR IMMEDIATE RELEASE

OLDWICK - OCTOBER 09, 2026 10:30 AM (EDT)
AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" (Excellent) of Triple Crown Assurance Co. (TCA) (Dallas, TX). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect TCA's balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

TCA is a captive insurance company wholly owned by Southwest Airlines Co. (SWA), a Texas-based company that operates Southwest Airlines, a major passenger airline in the United States and near-international markets.

TCA continues to maintain the strongest level of risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR). While the company's BCAR scores declined below acceptable levels as of year-end 2025 due to a $160 million dividend to SWA, management addressed the shortfall through a $100 million capital contribution in the first quarter of 2026, as well as retaining earnings produced in the first half of 2026. Moving forward, AM Best expects the captive's earnings to be fully retained without any dividends provided to its parent. Partially offsetting rating factors include a majority of capital being attributable to a loan back arrangement with its parent, the company's higher-than-average underwriting leverage metrics and its elevated credit risk exposure. The loan back is repayable upon demand, with limited counterparty risk due to SWA's investment grade credit quality as well as its affiliation and alignment of interests with its captive. The elevated credit risk exposure relates to the company's previous participation in a contractual reinsurance arrangement with several creditworthy captives. Despite exiting the agreement in late 2024, TCA will continue to have quarterly transactions on the remaining loss reserves for its participating treaty years until ultimately commuted.

TCA's operating performance has been profitable over the most recent five-year period. Underwriting gains in four of the five most recent years have been augmented by consistent and growing net investment income. In 2025, the company reported a modest underwriting loss due to increased loss experience on its medical expense cost containment (MECC) line of business. While MECC has been profitable for the captive over the long term, increased healthcare-related expenditures pressured loss costs in 2025. Underwriting results have shown improvement through the first half of 2026 and are expected to be favorable in the years ahead. TCA's business profile assessment considers its role as a single-parent captive providing various coverages for its only policyholder, SWA.

The company's ERM is considered appropriate as an extension of the ultimate parent's ERM. TCA is an integral component of SWA's ERM program as it provides specific insurance coverage to SWA more efficiently than the traditional market.

This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best's Credit Ratings (BCR), Best's Performance Assessments (PA), Best's Preliminary Credit Assessments (PCA) and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.