AM Best Downgrades Credit Ratings of Florida Family Insurance Company and Its Subsidiary
These Credit Ratings (ratings) reflect Florida Family’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The downgrades reflect deterioration in underwriting results in recent years that has resulted in performance metrics no longer supportive of a strong assessment. Florida Family’s underwriting performance has been impacted negatively by hurricanes, a challenging
The negative outlook on the Long-Term ICR reflects recent deterioration in risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). At last review, the group had reported a BCAR that was commensurate of an assessment of very strong; in the current review, the group’s BCAR dropped materially to a level assessed as strong. Further pressuring balance sheet strength is elevated reinsurance dependency and above-average net leverage, as compared with the personal property composite. The BCAR deterioration and view of risk-adjusted capitalization reflects higher gross probable maximum losses (PMLs) that are a product of the group’s expansion of its new homeowners product paired with less ground-up catastrophe reinsurance coverage due to a lower level of coverage being provided by the
The business profile assessment reflects Florida Family’s limited operating territory within a hurricane-prone state. Severe weather events continue to be Florida Family’s primary risk, which is a focal point in the group’s ERM program. The ERM program, which is considered appropriate, includes a comprehensive catastrophe reinsurance program, strategic placement of coverage and strict underwriting guidelines. The program is documented formally, with policies, procedures and risk tolerances clearly stated.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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Source: AM Best
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