AM Best

AM Best Affirms Credit Ratings of Factory Mutual Insurance Company and Its Subsidiaries


Connor Brach, FRM
Senior Financial Analyst
+1 908 439 2200, ext. 5573

Daniel Teclaw
+1 908 439 2200, ext. 5394

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159

Al Slavin
Senior Public Relations Specialist
+1 908 439 2200, ext. 5098


OLDWICK - JANUARY 27, 2023 01:30 PM (EST)
AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICRs) of “aa” (Superior) of Factory Mutual Insurance Company (Johnston, RI) and its subsidiaries, which are collectively referred to as FM Global Group (FM Global). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed listing of the companies.)

The ratings reflect FM Global’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).

FM Global maintains the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). The group’s balance sheet has proven long-term resilience against natural catastrophe losses, such as those experienced in 2017 and 2018. Augmenting sizable retentions for its highly protected risk book, substantial excess of loss reinsurance capacity plays an integral role in its ability to preserve and grow capital. Management has a history of protecting the balance sheet by prudently reserving losses in a timely fashion. Ultimate losses routinely result in better outcomes than modeled losses and management’s prudent and conservative initial reserve estimates, especially in catastrophe scenarios. Superior knowledge of its risks and expedient settlement of claims enables the group to move on fairly quickly after significant events.

The group has reported underwriting profits in the three most recent years and through the first nine months of 2022, after two consecutive years of underwriting losses in 2017 and 2018 from significant catastrophe activity. FM Global has garnered strong investment gains from its sizeable investment portfolio, which includes a large allocation to equities, further enhancing bottom-line results and driving solid surplus growth. That said, recent investment market volatility in 2022 resulted in a significantly negative change in unrealized gains and losses. Its strong liquidity position mitigates these likely temporary losses. With FM Global’s rebound in profitability and corresponding surplus growth, policyholder credits were approved to be paid in 2022 as a distribution of excess capital to its policyholders after being curtailed in the three prior years.

FM Global has a unique market position, with considerable exposure to policyholders that have highly recognizable corporate brands, which can introduce headline or reputational risk for large exposure events, as has been seen amid ongoing COVID-19-related business interruption claim filings. To date, several claims in multiple jurisdictions have been dismissed or, at best, continued, bearing out the company’s risk management expertise in underwriting its risks and well containing its true exposures within its risk tolerance.

The stable outlooks reflect AM Best’s expectation that FM Global’s risk-adjusted capitalization and operating performance will continue to exhibit generally excellent trends. AM Best expects that FM Global management’s ERM practices will continue to drive commensurately strong returns in its niche business model. The group’s high-risk tolerance periodically results in volatile underwriting performance from catastrophe events that management has successfully navigated over the organization’s long history. Negative rating action could occur if operating performance deteriorates materially relative to its strong assessment. Negative rating action also could occur if risk-adjusted capitalization is materially weakened by deteriorating non-catastrophe underwriting trends or following a prolonged equity market downturn.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa” (Superior) have been affirmed with stable outlooks for Factory Mutual Insurance Company and its following subsidiaries:

  • Appalachian Insurance Company

  • Affiliated FM Insurance Company

  • FM Insurance Company Limited

  • FM Insurance Europe S.A.

This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.

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