OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” of Wright National Flood Insurance Company (WNFIC) (San Antonio, TX). The outlook of these Credit Ratings (ratings) is stable.
The ratings reflect WNFIC’s balance sheet strength, which A.M. Best categorizes as strongest, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
The balance sheet assessment takes into consideration WNFIC’s risk-adjusted capitalization, the financial flexibility provided by its ultimate parent, Brown & Brown, Inc. [NYSE: BRO], and the financial support of the United States government, being the largest writer of federal flood insurance in the United States.
The ratings also reflect WNFIC’s consistent operating profitability and positive cash flows. Unlike traditional insurers, WNFIC is a federal flood insurer whose profits are driven by service fees and ceding commissions from the National Flood Insurance Program (NFIP). A.M. Best views WNFIC’s earnings profile as adequate.
Offsetting these positive rating factors are the inherent challenges and risk related to its limited business profile and its heavy dependence on the NFIP, which is critical to its core business. Although a market leader, competitive pressures exist from the private sector and potential changes in flood mapping. While A.M. Best does not expect any material changes to the NFIP program itself, nor the rules related to the Write Your Own Program, these programs are mission critical to WNFIC. NFIP is up for re-authorization on July 31, 2018.
A.M. Best views WNFIC’s management as experienced and highly competent in the field of flood insurance. A.M. Best also views WNFIC’s ERM practices as appropriate, given its conservative risk culture and defined risk controls, as well as the risk management support provided by Brown & Brown, Inc.
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