A.M. Best Revises Outlook to Negative for First Nonprofit Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of “a-” of First Nonprofit Insurance Company (FNIP) (Chicago, IL). Concurrently, A.M. Best has affirmed the FSR of B++ (Good) and ICR of “bbb+” of FNIP’s wholly owned subsidiary, Milwaukee Insurance Company (MIC) (Waukesha, WI). The outlook for these ratings is stable.

The revised outlook for FNIP’s ratings reflects its historically subpar operating performance and A.M. Best’s concerns that future returns may not be of sufficient strength to support the company’s current rating level. FNIP’s volatile return measures are primarily due to weak investment earnings, although underwriting results have been somewhat mixed over the past five years with weather driving losses since 2010.

Offsetting these negative rating factors are FNIP’s strong capitalization, favorable loss ratios and significant market presence in the nonprofit community. The company’s niche underwriting focus has helped it achieve favorable loss ratios, which are typically a few points below its peer composite. Despite FNIP’s very strong level of risk-adjusted capital, its ratings could be negatively impacted by continued weak operating results relative to its industry peers.

The ratings for MIC reflect its run-off status and negligible level of loss reserves. As a result, underwriting leverage is de minimus and risk-adjusted capitalization is very strong. Modest earnings are driven by the company’s investment portfolio.

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” and “Understanding BCAR for Property/Casualty Insurers.” 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.

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A.M. Best Co.Marc LiebowitzSenior Financial Analyst
908-439-2200, ext. 5071
[email protected]
orGerard AltonjiAssistant Vice President
908-439-2200, ext. 5626
[email protected]
orRachelle MorrowSenior Manager, Public Relations
908-439-2200, ext. 5378
[email protected]
orJim PeavyAssistant Vice President, Public Relations
908-439-2200, ext. 5644
[email protected]

Source: A.M. Best Co.