Best’s News & Research Service - August 31, 2016 12:12 PM (EDT)
A.M. Best Upgrades Ratings of State Farm Florida Insurance Company
- August 31, 2016 12:12 PM (EDT)
Oldwick //BestWire// - A.M. Best has upgraded the financial strength rating (FSR) to B++ (Good) from B+ (Good) and the issuer credit rating (ICR) to “bbb” from “bbb-” of State Farm Florida Insurance Company (SFFIC) (Winter Haven, FL). The outlook for the ICR has been revised to positive from stable, while the outlook for the FSR remains stable.
The rating upgrades reflect SFFIC’s solid risk-adjusted capitalization, favorable earnings trend and explicit support provided by its parent, State Farm Mutual Automobile Insurance Company (SFMAIC), most notably through reinsurance and capital support. The company also benefits considerably from the excellent brand-name recognition and market presence of the State Farm Group (SFMAIC and its affiliates). SFFIC is one of the largest providers of homeowners insurance in Florida. Along with its parent and affiliates, State Farm ranks as the leading provider of personal lines insurance in the state. Growth in policyholders’ surplus is attributed primarily to solid after-tax earnings, mainly attributed to rate adjustments, tighter underwriting standards and the absence of major weather-related events.
Partially offsetting these positive rating factors is the concentration of risk in the Florida homeowners market, which makes SFFIC susceptible to catastrophic loss accumulation, competitive market conditions and regulatory changes. Property catastrophe excess and aggregate reinsurance is in place to protect surplus from claims due to a significant storm or multiple storms, but the net retention on the property catastrophe excess program is high enough that the balance sheet could weaken from such events. SFFIC is also highly dependent upon SFMAIC for capital support as evidenced by $750 million in outstanding surplus notes, which comprises the majority of SFFIC’s overall capital base.
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.
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