The U.S. leads the pack in the percentage of older adults who have trouble paying their medical bills.
OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has revised the outlook to negative from stable and
affirmed the financial strength rating of B+ (Good) and issuer credit
rating of “bbb-” of Frank Winston Crum Insurance, Inc. (FWCI)
The rating actions reflect FWCI’s poor underwriting and operating
results in 2011, the revised business profile and execution risk
associated with the continued expansion of its guaranteed cost book, as
well as management’s plans to diversify into other lines of business.
The company is expected to report a significant underwriting and
operating loss in 2011, driven by losses in its guaranteed cost book of
business and in its professional employer organization (PEO) related
business. Furthermore, as a result of its geographic concentration risk,
with approximately 70% of its business in Florida, FWCI's operations are
highly exposed to additional competitive pressures and business
environment issues such as state reforms, state mandated rate changes
and legislative changes. In an effort to limit its concentration risk,
management is focused on obtaining licenses and growing FWCI's book of
business in states where the FrankCrum family of PEOs operate.
The company has also focused on growing its premium outside the PEO
related business by continuing to expand its guaranteed cost book of
business. Considering the inherent risks of growing this business amidst
challenging market conditions, as evidenced by the significant
deterioration in underwriting and operating results in 2011, A.M. Best
will continue to monitor FWCI's progress in achieving its business plan
to ensure that premium growth and the accumulation of loss reserves do
not strain its risk-adjusted capitalization and that overall operating
results are achieved in accordance with rating expectations.
The ratings also reflect FWCI’s adequate level of risk-adjusted
capitalization and the expected financial support provided in the form
of capital contributions from its owner, the Crum family. The Crum
family initially infused $7.0 million into the company in 2003, and A.M.
Best anticipates they will continue to support planned premium growth
with additional capital contributions as necessary, allowing the company
to maintain a level of capitalization that remains fully supportive of
its current ratings.
Factors that could trigger negative rating actions include a decline in
risk-adjusted capitalization that is below A.M. Best expectations, the
continuation of poor underwriting results, especially if driven by
significant adverse loss reserve development, and any material deviation
from the company's submitted financial projections. In addition, a lack
of financial support from the Crum family in maintaining the company’s
capital adequacy could also trigger a negative rating action. Positive
rating actions could be taken on FWCI's ratings if underwriting and
operating results improve and are consistently in line with higher rated
workers' compensation carriers, along with maintaining a supportive
level of risk-adjusted capitalization.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: “Risk
Management and the Rating Process for Insurance Companies”;
“Understanding BCAR for Property/Casualty Insurers”; “Catastrophe
Analysis in A.M. Best Ratings”; and “The Treatment of Terrorism Risk in
the Rating Evaluation.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Ed KeaneSenior Financial
Analyst908-439-2200, ext. email@example.comRachelle
MorrowSenior Manager, Public Relations908-439-2200,
Lagomarsino, CFAAssistant Vice President908-439-2200,
PeavyAssistant Vice President, Public Relations908-439-2200,
Source: A.M. Best Co.