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FOR IMMEDIATE RELEASE
OLDWICK - FEBRUARY 04, 2016 01:59 PM (EST)
A.M. Best has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” for The Providence Mutual Fire Insurance Company (Providence Mutual). The company is headquartered in Providence, RI.
The revised outlook reflects Providence Mutual’s unprofitable underwriting results over several years as a result of persistent significant weather events and its elevated expense ratio. Several weather events over the past five years have been significantly greater than the company had experienced in its history, particularly the early part of 2015 when the New England region experienced several weeks of record-setting snowfall and freezing temperatures. The company was especially vulnerable to this winter weather event due in part to its geographic concentration of property risks in the New England region.
While Providence Mutual’s policyholders’ surplus is expected to decline in 2015, the company continued to maintain an adequate risk-adjusted capital position due to its below average underwriting leverage. In addition, management has taken significant actions designed to mitigate the impact of future catastrophe weather events on overall performance and capitalization. Included in the company’s risk management process are a comprehensive reinsurance program and ongoing aggressive pricing and underwriting strategies.
Negative rating action could occur if frequent and severe weather events continue to impact the group’s underwriting performance or if other market disruptions cause operating losses that negatively impact risk-adjusted capitalization.
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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