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The affirmation of Frankenmuth’s ratings reflects its strong risk-adjusted capitalization, solid regional market presence and management’s ongoing efforts to reduce geographic concentration. Further, the stable outlook on the FSR acknowledges Frankenmuth’s historically profitable operations, strong agency relationships and A.M. Best’s expectations that operating results will stabilize and surplus growth will resume as a result of the corrective actions that have been implemented. These include rate increases, agency management initiatives and re-underwriting segments of its book of business.
The revised outlook for Frankenmuth’s ICR reflects the variability in underwriting performance over the last five years, which has caused operating performance to decline from historical levels. As a result, the group’s return measures have fallen below those of the commercial casualty industry composite. Most notably in 2008 and 2011, underwriting results suffered due to increased storm losses and severity in the personal automobile and workers’ compensation lines.
The ratings of Patriot Life reflect the formal guaranty issued by
Partially offsetting these strengths are Patriot Life’s modest operating profile, lack of scale and losses reported as it establishes a market presence. Patriot Life is managing a closed block of ordinary life business as well as a modest level of new business written during 2011.
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”; “Rating Members of Insurance Groups”; “The Treatment of Terrorism Risk in the Rating Evaluation”; and “Catastrophe Analysis in A.M. Best Ratings.”
Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.
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