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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 26, 2013 12:00 AM (EDT)
A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to First Founders Assurance Company (FFAC) (Chester, NJ). The outlook assigned to both ratings is stable.
The assigned ratings of FFAC reflect its low underwriting leverage and strong historical and pro forma earnings projections. The ratings also reflect the company's experienced management team with an average of over 30 years’ experience in U.S. Customs and Border Protection bonds.
Somewhat offsetting these positive rating factors are the execution risks associated with FFAC’s business plan as well as the risks associated with Customs and Border Protection bonds. However, the risks associated with Customs and Border Protection bonds are mitigated somewhat by the generally small size of the individual bond amounts. The outlook reflects A.M. Best's view that management’s business plans are reasonable, especially given its relationship with C.A. Shea & Company (Shea), which acts as FFAC’s managing general agent and program manager. Shea has been in business for more than 65 years and is a recognized leader in the underwriting, administration and claims handling of U.S. Customs bonds for leading surety companies.
While the company is well positioned at its current rating level, negative rating actions would occur if FFAC’s planned financial results materially deviate from its projections and/or risk-adjusted capitalization were to decline below an acceptable level required by A.M. Best. In addition, excessive growth in premiums, material changes in the capital structure or management of the company also could result in negative rating actions.
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.