CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 31, 2012 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating (FSR) to B++ (Good) from A- (Excellent) and issuer credit rating (ICR) to “bbb+” from “a-” of Armed Forces Insurance Exchange (AFIE) (Leavenworth, KS). The outlook for the FSR has been revised to stable from negative, while the outlook for the ICR is negative.
The ratings of AFIE recognize its adequate, albeit reduced, capitalization and long-standing history as a provider of personal lines insurance products to the preferred risk segment of the military market. Partly offsetting these positive rating factors are the company’s unfavorable underwriting performance over the past five years, geographic exposure concentration in coastal areas and elevated underwriting expense ratio.
The revised outlook for the FSR reflects A.M. Best’s expectations that management will continue to successfully execute its various profitability initiatives designed to improve the company’s ongoing results.
Negative rating actions could occur if there were an unexpected and material decline in AFIE’s risk-adjusted capitalization, continued deterioration in its operating performance or a diminishing of its liquidity measures over the next several years.
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. Key criteria utilized include: “Catastrophe Analysis in A.M. Best Ratings” and “Risk Management and the Rating Process for Insurance Companies.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source.