JULY 13, 2017 08:47 AM (EDT)
A.M. Best Affirms Credit Ratings of Members of Erie Insurance Group and Erie Family Life Insurance Company
|Jonathan Harris, CFA, FRM|
Senior Financial Analyst—P/C
+1 908 439 2200, ext. 5771
Frank Walko, CPA, FLMI
+1 908 439 2200, ext. 5072
Manager, Public Relations
+1 908 439 2200, ext. 5159
Director, Public Relations
+1 908 439 2200, ext. 5644
FOR IMMEDIATE RELEASE
OLDWICK - JULY 13, 2017 08:47 AM (EDT)
A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa” of the property/casualty members of Erie Insurance Group (Erie). Additionally, A.M. Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of Erie Family Life Insurance Company (EFL). Concurrently, A.M. Best has affirmed the Long-Term Issue Credit Rating of “bbb+” on EFL’s $20 million, 6.26% surplus notes, due Dec. 31, 2025, to Erie Insurance Exchange (EIE). The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Erie, PA, unless otherwise specified.
The lead company in Erie is EIE. The rest of the property/casualty group comprises inter-company pooling members, Erie Insurance Company and Erie Insurance Company of New York (Rochester, NY), and reinsured subsidiaries Erie Insurance Property & Casualty Company and Flagship City Insurance Company.
The ratings reflect Erie’s superior risk-adjusted capitalization, favorable history of operating performance and well-established regional market presence. The group’s strong capital position reflects management’s conservative operating philosophy. Erie’s profitable operating results stem from management’s adherence to underwriting and pricing discipline, strong investment income, and well-established agency relationships. These positive attributes are offset partially by the group’s geographic concentration in the mid-Atlantic region, which exposes its operating results to weather-related losses, regulatory changes and competitive market pressures. However, Erie continues to maintain a comprehensive reinsurance program in an effort to mitigate the impact of weather-related losses on its profitability and capitalization.
The ratings reflect EFL’s strategic value to its parent, EIE, in marketing life and annuity products to EIE’s property/casualty client base, strong risk-adjusted capitalization, positive but fluctuating earnings in recent years and positive life premium growth trends. In addition, EFL benefits from EIE’s strong, knowledgeable and loyal independent agent distribution channel, which the group considers as a competitive advantage. Partially offsetting rating factors include the challenges of growing its ordinary life book of business, which is impacted by new business strain, an elevated percentage of interest-sensitive reserves, spread compression in its annuity blocks of business, its regional business profile and its relatively modest contribution to the enterprise.
This press release relates to rating(s) that have been published on A.M. 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 A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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