A.M. Best Upgrades Ratings of Forestry Mutual Insurance Company
A.M. Best Co. has upgraded the financial strength rating to C++ (Marginal) from C+ (Marginal) and issuer credit rating to “b+” from “b-” of Forestry Mutual Insurance Company (FMIC) (Raleigh, NC). The outlook for both ratings has been revised to positive from stable.
The ratings reflect FMIC’s increasing surplus and positive operating results as well as its expertise in loss control and safety procedures needed for the higher hazard risks the company insures. Additionally, FMIC has benefitted from management’s initiatives taken in recent years to re-underwrite the business, improve FMIC’s geographic diversification into neighboring states and to implement a zero tolerance for failure to comply with safety requirements. The positive outlook reflects A.M. Best’s expectation that FMIC’s operating performance and risk-adjusted capitalization will continue to improve in the medium term.
These positive rating factors are somewhat offset by the company’s limited business profile as well as by market and economic conditions that create unique challenges for a single line niche writer of workers’ compensation insurance for forestry and logging related risks. In addition, while FMIC’s performance has been negatively affected by an increase in large claims, overall frequency levels have significantly improved in recent years. With a lowering of FMIC’s retention levels during 2009 on its reinsurance program, it is better protected from large losses; and thus, reduced volatility in earnings is expected in the future. Also mitigating the increase in larger claims is the effectiveness of FMIC’s safety program and strong reserving practices.
For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at http://www.ambest.com/ratings/methodology.
Advisor News
Annuity News
Health/Employee Benefits News
Life Insurance News