Best’s News & Research Service - December 09, 2021 01:05 PM (EST)
AM Best Revises Outlooks to Negative for Franklin Mutual Group’s Members
- December 09, 2021 01:05 PM (EST)
Oldwick //BestWire// - AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings of “aa-” (Superior) of Franklin Mutual Insurance Company, FMI Insurance Company and POM Insurance Company (all members of and together known as Franklin Mutual Group or the group). All companies are domiciled in Branchville, NJ.
The Credit Ratings (ratings) reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The negative outlooks reflect the deterioration in the group’s operating performance in recent years, particularly in comparison with the current strong assessment. Underwriting performance has declined over the most recent five-year period. The recent deterioration is driven primarily by increased expenses related to a systems implementation and upgrades, as well as elevated fire losses and storm losses from Hurricanes Isias and Ida in 2020 and 2021, respectively. While management has taken actions to stabilize results, the ultimate effectiveness in returning performance to historical norms is uncertain.
The operating performance assessment benefits from historic profitability that outperformed the composite. The group’s balance sheet strength is supported by its strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and consistently favorable loss reserve development. Additionally, the group’s strong local presence in New Jersey supports the neutral business profile assessment, and the formalized risk management policies and procedures support the ERM assessment of appropriate.
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 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.