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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 23, 2013 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A+ (Superior) and issuer credit ratings of “aa-” of The Philadelphia Contributionship for the Insurance of Houses From Loss by Fire, Inc. (Philadelphia Contributionship) and its wholly owned subsidiaries, Philadelphia Contributionship Insurance Company and Germantown Insurance Company. All companies are domiciled in Philadelphia, PA.
The revised outlook reflects Philadelphia Contributionship’s trend of underwriting losses over the past three years, which were driven by record catastrophes and other severe weather-related events. However, surplus and capitalization declined only modestly, as the losses were largely offset by net investment income and capital investment gains.
The ratings of Philadelphia Contributionship acknowledge its sustained, strong capitalization and long-standing market presence in Philadelphia and the surrounding areas. These positive rating factors are partially offset by the group's high investment leverage, which leaves surplus exposed to equity market volatility, and its concentration of property business, which while subject to management’s ongoing catastrophe risk mitigation initiatives, remains susceptible to losses from severe, weather-related events.
Negative rating actions could occur if there is a sudden, unexpected and material decline in Philadelphia Contributionship’s risk-adjusted capitalization, a deterioration in its operating performance or its liquidity measures are diminished. Positive rating actions, including removal of the negative outlook, could occur following a material improvement in the company’s risk-adjusted capitalization or sustained improvement in its operating performance.
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.