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A.M. Best Downgrades Issuer Credit Rating of National Fire and Indemnity Exchange


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Kevin Dorsey
Senior Financial analyst
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kevin.dorsey@ambest.com

Joseph Burtone
Director
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joseph.burtone@ambest.com

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Jim Peavy
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james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - AUGUST 14, 2018 01:19 PM (EDT)
A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb” from “bbb+” and affirmed the Financial Strength Rating (FSR) of B++ (Good) of National Fire and Indemnity Exchange (NFIE) (St. Louis, MO). The outlook of the Long-Term ICR has been revised to stable from negative, while the outlook of the FSR remains stable.

The Credit Ratings (ratings) reflect NFIE’s balance sheet strength, which A.M. Best categorizes as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

The rating actions also reflect NFIE’s volatility in operating performance, driven primarily by adverse underwriting performance. Underwriting results have been impacted negatively by lack of real premium growth, elevated underwriting expenses and exposure to weather-related catastrophe loss events, especially in its two largest states, Florida and Texas. As a result, the company’s five-year average pre-tax and total returns on revenue and equity are favorable but lag the commercial property composite. In addition, the company’s five-year average combined and operating ratios also compare unfavorably with the composite. However, absent weather-related losses, NFIE’s underlying book of business is performing well, as its five-year average pure loss ratio compares favorably with its composite average.

This press release relates to Credit Ratings 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.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.


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AMB# Company Name
003245 National Fire and Indemnity Exchange