AM Best Affirms Credit Ratings of Factory Mutual Insurance Company, Its Subsidiaries and Affiliate

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa” (Superior) of Factory Mutual Insurance Company (FMIC) (Johnston, RI) and its subsidiaries, which are collectively referred to as FM or FM Group. At the same time, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Velocity Specialty Insurance Company (VSIC) (Wilmington, Delaware), an affiliate of FM Group. The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect FM Group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

FM Group’s balance sheet strength assessment remains at the strongest level, supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). In recent years and through the first nine months of 2025, the group has produced robust surplus growth through strong operating results. The group’s balance sheet has proven to have long-term resilience against natural catastrophe losses on its commercial property book of business. Comprehensive per risk and per catastrophe reinsurance programs are in place to reduce retained risks to a manageable level. Management establishes loss reserves through a conservative approach, which has typically resulted in favorable prior period development. Low underwriting leverage metrics contribute toward the group’s strongest BCAR level and overall balance sheet strength.

FM Group generated solid underwriting profits in each of the most recent five years and is expected to post further gains for full year 2025. Underwriting initiatives focused on improving risk selection and rate adequacy have been successfully implemented, supporting these strong results. In addition, FM has benefited from consistent and growing net investment income, as well as significant capital gains, on its substantial investment portfolio. The group invests with a long-term view, with an overweight allocation to equity securities, a key driver of surplus growth. With favorable results continuing, membership credits were once again approved for members renewing in 2025 and 2026, as well as an additional ‘resilience credit’.

The stable outlooks reflect AM Best’s expectation that FM’s risk-based capitalization and operating performance will continue to exhibit generally excellent trends. AM Best recognizes FM management’s risk management capabilities, which should continue to generate commensurately strong returns in its niche business model of providing calculation risk coverages at high levels for highly protected industrial property risks. The group’s risk tolerance periodically results in volatile underwriting results from catastrophe events that management has successfully navigated over the group’s long history.

The ratings of VSIC reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. In addition, the ratings consider implicit and explicit support provided by its parent, FMIC.

VSIC continues to maintain the strongest level of risk-adjusted capitalization, as measured by BCAR. After modest underwriting losses in its first two years of operation, the company reports solid underwriting profits through the first nine months of 2025 with the expectation of solid profits in 2026. The limited business profile assessment reflects the recent start up nature of the entity, the execution risk and challenges associated with these types of companies, and the myriad challenges facing insurers that focus on commercial property risks in geographically concentrated, catastrophe prone locations. FM recently demonstrated explicit support through a sizable capital contribution during the fourth quarter of 2025 in support of VSIC’s ongoing growth.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” (Superior) have been affirmed with stable outlooks for FMIC and its following subsidiaries:

• Affiliated FM Insurance Company
• Appalachian Insurance Company
• FM Insurance Europe S.A.

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 use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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