OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of FHM Insurance Company (FHM) (Jacksonville, FL).
These rating actions reflect the significant deterioration in FHM’s underwriting performance in recent years, with reported underwriting losses well in excess of management’s projections previously shared with A.M. Best and the expectation for continued weak results over the near term. The deterioration in 2010 was largely related to underperforming out-of-state business associated with its expansion efforts, while underwriting losses in 2011 were driven, in part, by reserve strengthening actions for accident years 2007 through 2010 and continued weak pricing levels.
The affirmation of the ratings reflects FHM’s strong capitalization, relatively solid operating results in earlier years and established presence within its market segment. The positive attributes recognize the company’s focused underwriting and aggressive claims management, which historically produced relatively solid underwriting results, despite a significant reduction in workers’ compensation rates within Florida since legislative reforms were passed in 2003.