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FOR IMMEDIATE RELEASE
OLDWICK - JUNE 02, 2015 03:47 PM (EDT)
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit rating (ICR) of "bbb" of Armed Forces Insurance Exchange (AFIE) (Leavenworth, KS).
The revised outlook reflects AFIE's improved operating trends as underwriting results have significantly improved relative to prior periods, continued strong risk-adjusted capitalization, as measured by Best's Capital Adequacy Ratio (BCAR), and sustained redundant loss reserve development over the past 10 years. The positive rating attributes are also derived from AFIE's corrective underwriting initiatives that have led to the reduction in its property-related loss ratio following management's concerted efforts to improve the loss experience on property-related exposures.
These factors are offset by the company's concentration of coastal exposures that exposes its results to the probability of catastrophic losses and an above average underwriting expense ratio. However, performance in future years should benefit from management's risk mitigation strategies and numerous initiatives to improve profitability.
The ratings could be negatively impacted if there is an unexpected and material decline in AFIE's risk-adjusted capitalization, material deterioration in its operating performance or a diminishing of its liquidity measures over the next several years. Conversely, positive rating action could occur if the operating performance improvement and balance sheet strength continue over 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. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .
Key insurance criteria reports utilized:
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 visit A.M. Best's Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.