OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit ratings of “a” of Fireman’s Fund Insurance Company (FFIC) (Novato, CA) and its reinsured affiliates, collectively referred to as Fireman’s Fund. The outlook for all ratings is stable. (See below for a detailed listing of the companies.)
The ratings reflect Fireman’s Fund’s strong brand recognition and expertise within specialty commercial lines and high net worth individuals, coupled with its supportive level of risk-adjusted capitalization. In addition, the ratings recognize Fireman’s Fund’s strategic importance to the global insurance operations of its ultimate parent, Allianz Societas Europaea (Allianz SE) (Germany). The ratings also take into account the substantial explicit and implicit support which Allianz SE provides, as demonstrated by significant reinsurance and capital contributions.
Offsetting these positive rating factors is Fireman’s Fund’s underwriting performance in the majority of the past five years, which was not in line with its historical levels or peer composite averages due to increased weather-related and catastrophe losses, along with adverse development of loss reserves. Most notably, a combination of multi-peril crop losses, Superstorm Sandy-related losses and adverse reserve development in 2012 contributed to the organization’s poor underwriting results. Management has taken corrective actions to improve results, which was reflected in the group’s smaller underwriting loss and improved operating income in 2013.
It is A.M. Best’s expectation that it will take several years for Fireman’s Fund to return to a consistent level of profitability. Furthermore, A.M. Best expects that Allianz SE will continue to provide support to Fireman’s Fund, helping to maintain a level of capital that will remain supportive of its ratings as management initiatives continue to take hold.
A.M. Best does not anticipate favorable rating movement for Fireman’s Fund in the near to midterm. Negative rating actions may occur if underwriting profitability does not continue to show sustainable improvement or if there is a considerable decline in risk-adjusted capitalization. In addition, if A.M. Best determines that Fireman’s Fund’s strategic importance to Allianz SE no longer warrants the current level of rating enhancement, there could be negative pressure.
The FSR of A (Excellent) and ICRs of “a” have been affirmed for Fireman’s Fund Insurance Company and its following reinsured affiliates:
- American Automobile Insurance Company
- National Surety Corporation
- The American Insurance Company
- Associated Indemnity Corporation
- Chicago Insurance Company
- Fireman’s Fund Indemnity Corporation
- Fireman’s Fund Insurance Company of Hawaii, Inc.
- Fireman’s Fund Insurance Company of Ohio
- Interstate Fire & Casualty Company
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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