OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Besthas affirmed the financial strength rating (FSR) of A
(Excellent) and the issuer credit ratings (ICR) of “a” of the
property/casualty subsidiaries of United Fire Group, Inc. (UFG)
[NASDAQ: UFCS] (collectively known as United Fire & Casualty Group),
which operate under an inter-company pooling agreement led by United
Fire & Casualty Company. Concurrently, A.M. Best has affirmed
the ICR of “bbb” of UFG. In addition, A.M. Best has assigned a financial
strength rating (FSR) of A (Excellent) and an issuer credit rating (ICR)
of “a” for UFG Specialty Insurance Company(UFG Specialty). At
the same time, A.M. Best has affirmed the FSR of A- (Excellent) and the
ICR of “a-” of United Life Insurance Company (ULIC), a
wholly-owned subsidiary of UFG. The outlook for all ratings is stable.
All companies are headquartered in Cedar Rapids, IA. (See below for a
detailed listing of the companies and ratings.)
The ratings of United Fire & Casualty Group reflect its solid
risk-adjusted capitalization, diversified commercial product offerings,
historically favorable core reserve levels, long-standing agency
relationships, solid regional franchise and the financial flexibility
afforded by UFG. In addition, underwriting results have improved over
the past two years as a result of rate revisions, less catastrophic and
large loss activity and continued favorable prior year loss reserve
development.
These positive rating factors are partially offset by the variability in
United Fire & Casualty Group’s underwriting and operating results in
recent years, driven mainly by catastrophe and weather-related losses
and the continued challenging, albeit improving, market conditions in
the group’s core markets.
The ratings for UFG Specialty reflect the implicit support provided by
United Fire & Casualty Company as a result of its full integration into
the group’s management and operations. UFG Specialty was activated in
2014 as the dedicated carrier for the group’s excess and surplus lines
admitted writings.
The ICR of UFG recognizes the capital strength of its subsidiaries and
the fact that it has no outstanding debt.
While A.M. Best believes UFG and United Fire& Casualty Group’s ratings
are well-positioned at their current rating levels, factors that may
lead to negative rating actions include a trend of deteriorating
underwriting and operating performance to a level below its peers and/or
an erosion of surplus that causes a decline in risk-adjusted capital to
a level that no longer supports the current ratings.
The ratings of ULIC reflect its strong risk-adjusted capitalization,
improved first-year premium growth within ordinary life and the high
credit quality of its investment portfolio. Partially offsetting these
strengths include a decline in earnings over the five-year period due to
new business strain and ongoing spread compression given its high
proportion of interest rate sensitive reserves along with some
geographic and distributor concentration risk.
Positive rating movement for ULIC is unlikely in the near term. Factors
that may result in a negative rating action include a continued material
decline in operating performance and/or a significant decline in
risk-adjusted capitalization.
The FSR of A (Excellent) and the ICRs of “a” have been affirmed and/or
assigned for United Fire & Casualty Company and its following
property/casualty subsidiaries:
- Lafayette Insurance Company
- Addison Insurance Company
- United Fire & Indemnity Company
- United Fire Lloyds
- Mercer Insurance Company
- Financial Pacific Insurance Company
- Mercer Insurance Company of New Jersey, Inc.
- Franklin Insurance Company
- UFG Specialty Insurance Company
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:
-
Catastrophe Analysis in A.M. Best Ratings
-
Equity Credit for Hybrid Securities
- Insurance Holding Company and Debt Ratings
-
Rating Members of Insurance Groups
-
Rating New Company Formations
-
Risk Management and the Rating Process for Insurance Companies
-
The Treatment of Terrorism Risk in the Rating Evaluation
-
Understanding BCAR for Property/Casualty Insurers
-
Understanding BCAR for U.S. and Canadian Life/Health Insurers
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. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc.ALL RIGHTS
RESERVED.
A.M. Best Company, Inc.
Michael Russo
Senior
Financial Analyst—P/C
(908) 439-2200, ext. 5372
michael.russo@ambest.com
or
Frank
Walko, CPA
Financial Analyst—L/H
(908) 439-2200,
ext. 5072
frank.walko@ambest.com
or
Christopher
Sharkey
Manager, Public Relations
(908)
439-2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim
Peavy
Assistant Vice President, Public Relations
(908)
439-2200, ext. 5644
james.peavy@ambest.com
Source: A.M. Best Company