Press Release - JANUARY 09, 2019
AM Best Revises Outlooks to Stable for American Inter-Fidelity Exchange
FOR IMMEDIATE RELEASE
OLDWICK - JANUARY 09, 2019
The ratings reflect AIFE’s balance sheet strength, which AM Best categorizes as strong, as well as its strong operating performance, limited business profile and appropriate enterprise risk management.
The revised outlooks reflect AIFE’s improving capitalization in support of its growing and evolving business mix, and AM Best’s expectation for continuing solid underwriting profitability. The company has a history of growing surplus organically in a difficult line of business through underwriting profits and investment income but has seen underwriting leverage grow as premium growth has outpaced surplus growth and pressured the capital base. One of the exchange’s founding sponsors contributed capital late in 2018 to fortify the balance sheet. The company also is rebalancing its book of business, emphasizing auto physical damage as shorter tail, lower risk coverages to offset its longer tail, higher severity commercial auto liability line of business. Recent inroads with industry associations have led to significant premium growth in physical damage volume, while the company continues to reduce covered units where necessary in pursuit of more adequate pricing for its liability coverage. Management has profitably navigated the difficult commercial auto liability market, with underwriting profits in nine of the past 10 years, and AM Best expects it will continue to successfully manage its underwriting operations going forward, supported by appropriate levels of surplus.
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