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FOR IMMEDIATE RELEASE
OLDWICK - MARCH 02, 2016 09:05 AM (EST)
A.M. Best has revised the issuer credit rating (ICR) outlook to negative from stable and affirmed the financial strength rating (FSR) of A (Excellent) and the ICRs of “a+” of Germantown Insurance Company, Philadelphia Contributionship Insurance Company and The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, Inc., which are members of the Philadelphia Contributionship Group (the Contributionship). The outlook for the FSR remains stable. All companies are domiciled in Philadelphia, PA.
The revised outlook is a result of the Contributionship’s inconsistent operating performance primarily in the property lines of business over the past five years, driven mainly by weather-related losses in the group’s concentration of business in New Jersey. In addition, the group’s risk-adjusted capitalization continues to be highly influenced by its elevated common stock leverage that exposes its policyholders’ surplus to volatile equity market conditions.
Partially offsetting the negative rating factors is the Contributionship’s current level of risk-adjusted capitalization that remains supportive of the rating. In addition, the group maintains a well-established regional market presence and has implemented several strategies over the past few years that are designed to improve the operating performance in the near term. The actions undertaken are in the areas of exposure management, technology and rate increases. Furthermore, management plans to continue to grow in states other than New Jersey in order to continue to gradually reduce its coastal exposures and diversify geographically. The Contributionship is also supported by a network of longstanding, strong agency relationships.
Negative rating action could follow if the Contributionship were to incur material losses in its risk-adjusted capitalization, a significant decrease in its liquidity measures, continued volatile performance or have substantial adverse reserve development relative to its peers, as well as the industry’s averages. Positive rating action could occur if there is consistent improvement in the group’s operating results that leads to increased 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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