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FOR IMMEDIATE RELEASE
OLDWICK - JANUARY 19, 2023 10:28 AM (EST)
AM Best has downgraded the Financial Strength Rating to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Ratings to “a+” (Excellent) from “aa-” (Superior) of Franklin Mutual Insurance Company, FMI Insurance Company and POM Insurance Company (all members of and together known as Franklin Mutual Group). The outlook of these Credit Ratings (ratings) has been revised to stable from negative. All companies are domiciled in Branchville, NJ.
The ratings reflect the Franklin Mutual Group’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).
The rating downgrades reflect the continued deterioration in the group’s underwriting performance over the current five-year period as driven by severe weather-related events, fire losses, inflation and supply chain issues, as well as elevated expense structure. Through the first nine months of 2022, the company reported a sizable underwriting loss, which puts the group on pace to report significant underwriting losses for the fourth time in the past five years, due to an increase in frequency and severity events. While the group’s management has implemented a series of initiatives such as rate increases, nonrenewal unprofitable accounts, technology and processes all designed to improve future operating performance, the degree of demonstrated volatility in performance is no longer indicative of AM Best’s previous strong assessment.
The stable outlooks reflect AM Best’s expectation that the group will continue to curb volatility and improve its underwriting performance. The stable outlooks further consider the historical financial strength of the group’s overall balance sheet strength including its risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), at the strongest level, which is supportive of the current ratings.
This press release relates to Credit Ratings that have been published on AM 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 AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.