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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 06, 2014 02:58 PM (EDT)
A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of "a-" of American Inter-Fidelity Exchange (AIFE) (Merrillville, IN).
The negative outlook reflects A.M. Best's concern that the very large ramp up in premium production will further strain capital and infrastructure support, notwithstanding the company's recent expansion into a new home office with more space and the hiring of additional staff. Execution risk is a concern as the company seeks to continue to grow geographically and within its current footprint.
The ratings reflect AIFE's adequate capitalization, long history of solid underwriting and operating performance, as well as the company's favorable loss reserve development. Other positive factors include AIFE's favorable investment results and strong cash flows from underwriting and operations. Partially offsetting these positive rating factors are the company's rapid growth in business production in 2012 and 2013, somewhat limited market profile and elevated investment leverage.
Downward rating pressure may occur if continued growth further strains risk adjusted capitalization and / or if results materially deteriorate.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.