Oldwick, NJ -(BusinessWire)- A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and issuer credit ratings to “a” from “a-” of FCCI Insurance Company and its five reinsured subsidiaries, Brierfield Insurance Company (Ridgeland, MS), FCCI Advantage Insurance Company, FCCI Commercial Insurance Company, Monroe Guaranty Insurance Company (Carmel, IN) and National Trust Insurance Company (Carmel, IN), collectively referred to as the FCCI Insurance Group (FCCI). The outlook for the above ratings has been revised to stable from positive. All companies are domiciled in Sarasota, FL, unless otherwise specified.
The ratings reflect FCCI’s strong capitalization resulting from consistently solid operating performance and prominent position within the Florida property/casualty marketplace. Partially offsetting these positive rating factors is the group’s somewhat concentrated business profile, as 50% of its direct premium writings are derived from the state of Florida, and nearly 80% are derived from its top five states. This concentration exposes the group to the potential for regulatory, judicial and/or legislative events that could negatively impact operating results. However, this risk has been somewhat mitigated by the group’s geographic expansion and significant premium diversification over the past decade. Despite these concerns, the outlook reflects FCCI’s strong level of risk-adjusted capitalization, consistent operating results, solid regional market knowledge and favorable loss reserve development trends.
FCCI’s positive rating factors are largely derived through strong claim management and conservative loss reserving practices. Additionally, they reflect the group’s commitment to disciplined underwriting, long-lasting relationships with its agents, strong medical management capabilities, extensive loss control procedures and advanced use of technology and sophisticated predictive analytical modeling tools. They also reflect FCCI’s enhanced market profile that has resulted from profitable expansion efforts through a geographic and product line diversification strategy. The negative factors reflect some concern with the workers’ compensation line, which comprises a significant portion of FCCI’s total book of business. In recent years, this line has been impacted by competitive market conditions, a weak macroeconomic environment and the accumulation of state-mandated workers’ compensation rate reductions.
A deterioration in operating results for a sustained period, either through weakened underwriting performance due to significant growth in premium reserves, or an increase in catastrophe-related losses beyond expectations that weakens overall capitalization, would likely cause negative rating pressure.