AM Best downgrades credit ratings of issuers of Florida Family Insurance Company and its subsidiary

OLDWICK, NJ–(BUSINESS WIRE)–AM Best lowered the long-term issuer credit ratings (long-term ICR) from “bbb” (good) to “bbb+” (good) and affirmed Florida Family Insurance’s financial strength rating (FSR) of B++ (good) Company and its subsidiary, Florida Family Home Insurance Company, which together constitute the two pool members of Florida Family Group (Florida Family). The FSR outlook has been revised from stable to negative, while the long-term ICR outlook is negative. Both companies are domiciled in Bonita Springs, Florida.

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

The deterioration in long-term ICRs reflects AM Best’s concerns about Florida Family’s balance sheet strength following the continued erosion of surpluses due to underwriting losses, significantly elevated underwriting leverage metrics, inconsistent development of reserves and a downward trend in risk-adjusted capitalization, as measured by Best’s capital adequacy ratio (BCAR). The deterioration in BCAR and the risk-adjusted capitalization view reflect higher gross probable maximum losses (PML) which are the product of the group’s expansion of its new product for owners, combined with reinsurance coverage against lesser catastrophes, which collectively translate into higher net PMLs across the Value-at-Risk intervals. Heavy reliance on reinsurance and above-average net debt put additional pressure on balance sheet strength, relative to the personal property composite.

The negative rating outlook reflects Florida Family’s underwriting performance, which was negatively impacted by weather-related events, a challenging insurance market in Florida, which includes increases in claims frequency and severity. related to water, and more recently, the development of reserves for adverse losses. Management has implemented a number of actions to improve performance, including rate increases, non-renewal of undesirable risks, closure of new business in specific areas of Florida, and effective management of security issues. allocation of benefits. The group recently launched a new home insurance product, which has produced modest growth in historical footprint and additional underwriting in territories previously closed to wind business. The business profile rating reflects Florida Family’s limited operating territory in a hurricane-prone state. Severe weather continues to be Florida Family’s top risk, which is a focus of the group’s ERM program.

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 relevant 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 more information on the use and limitations of credit rating opinions, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best’s Credit Scores, Best’s Performance Ratings, Best’s Preliminary Credit Ratings, and AM Best’s press releases, please see the Guide to Proper Use of Best’s Best ratings and reviews.

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 more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by AM Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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