OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Besthas affirmed the Financial Strength Rating (FSR) of A
(Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of
“a” of the property/casualty subsidiaries of United Fire Group, Inc.
(UFG) [NASDAQ: UFCS] (collectively known as United Fire & Casualty
Group), which operates under an inter-company pooling agreement led
by United Fire & Casualty Company. Concurrently, A.M. Best
has affirmed the Long-Term ICR of “bbb” of UFG. At the same time, A.M.
Best has affirmed the FSR of A- (Excellent) and the Long-Term ICR of
“a-” of United Life Insurance Company (ULIC), a wholly owned
subsidiary of United Fire & Casualty Company, which is a wholly owned
subsidiary of UFG. The outlook of these Credit Ratings (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 three 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,
as seen in the first half of 2016, and the continued challenging, albeit
improving, market conditions in the group’s core markets.
The Long-Term 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 severe reduction in the profitability
of its core operating entities' core books of business, material losses
in the risk-adjusted capitalization of the operating units, a severe and
sustained reduction in the profitability of the group’s investment
portfolio, or acute deterioration of the group’s reserves effecting
surplus. The inverse is also true if the group were to continue to
sustain consistent profitable results that add to surplus and
outperforms its peers.
The ratings of ULIC are based on its strategic importance in marketing
life insurance and fixed annuities to UFG, its property/casualty parent,
more-than-adequate risk-adjusted capitalization, and positive ordinary
life sales trends. Partially offsetting these rating factors include
declining earnings trends resulting in weaker return ratios, high
allocation to, albeit declining, interest-sensitive liabilities, and
regional business profile.
Positive rating actions may occur if there is a positive rating action
at the parent company. Negative rating actions may occur if ULIC does
not meet A.M. Best’s expectations, or if there is a significant decline
in risk-adjusted capitalization due to continued trends in operating
results or material dividends taken out of the company.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been
affirmed 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
This press release relates to Credit Ratings 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. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings.
A.M. Best is the world’s oldest and most authoritative insurance
rating and information source. For more information, visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating Services, Inc. and/or its
subsidiaries. ALL RIGHTS RESERVED.
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A.M. Best
Joel Silverthorn
Senior Financial
Analyst—P/C
+1 908 439 2200, ext. 5120
joel.silverthorn@ambest.com
or
Frank
Walko, CPA
Financial Analyst—L/H
+1 908 439
2200, ext. 5072
frank.walko@ambest.com
or
Christopher
Sharkey
Manager, Public Relations
+1 908 439
2200, ext. 5159
christopher.sharkey@ambest.com
or
Jim
Peavy
Assistant Vice President, Public Relations
+1
908 439 2200, ext. 5644
james.peavy@ambest.com
Source: A.M. Best