OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has upgraded the issuer credit rating (ICR) to “bb+” from “bb” and affirmed the financial strength rating of B (Good) of Forestry Mutual Insurance Company (FMIC) (Raleigh, NC). The outlook on both ratings has been revised to positive from stable.
The ICR upgrade reflects the improvement seen in underwriting and operating results in 2013, as well as positive underwriting cash flows for the first time since 2007. FMIC has begun to benefit from geographic diversification since entering markets in neighboring states, as well as the initiatives taken in recent years to restructure FMIC’s reinsurance program to reduce net loss ratio volatility. The company has also non-renewed unprofitable accounts and implemented a zero-tolerance policy for failure to comply with safety requirements.
The revised outlook reflects A.M. Best's expectations for positive rating movement should FMIC’s results continue to improve. While the company is well positioned at its current rating level, negative rating actions could occur if earnings decline or capitalization levels materially deteriorate.
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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