OLDWICK, N.J.–(BUSINESS WIRE)–#insurance—AM Best has revised the outlooks to positive from stable for the Long-Term Issuer Credit Ratings (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of Federated Mutual Insurance Company (Federated Mutual) and its main subsidiaries, Federated Service Insurance Company, Federated Reserve Insurance Company, and Granite Re, Inc. (Oklahoma City, OK). These companies are collectively referred to as Federated Mutual Group (Federated). The outlook of the FSR is stable. Additionally, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of Federated Life Insurance Company (Federated Life). At the same time, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of Federated Specialty Insurance Company (Federated Specialty) (Dover, DE). The outlook of these Credit Ratings (ratings) is stable. All companies are domiciled in Owatonna, MN unless otherwise specified.
The ratings of Federated reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management (ERM).
The revision of the Long-Term ICR outlooks to positive from stable is driven by Federated’s operating performance, which has shown sustained improvement in underwriting and operating profitability since 2021. Over the past few years, the group has seen healthy growth in premiums, while keeping pace with inflationary pressures. Federated also has been the beneficiary of high persistency, adherence to price adequacy, minimal volatility, favorable loss reserve development and disciplined expense management. The culmination of all of these factors have contributed to Federated’s ability to perform at levels more in line with its higher-assessed peers over the past couple of years. Going forward, AM Best will continue to monitor the group’s favorable trend in profitability and whether these results prove to be sustainable over the intermediate term.
Federated’s balance sheet assessment is well-supported by its risk-adjusted capitalization, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). Additionally, the group maintains favorable levels of liquidity, modest underwriting leverage and a low dependence on reinsurance that further solidifies its balance sheet strength. AM Best assesses Federated’s ERM as appropriate given the organization’s strong risk management capabilities, which supports the group’s overall risk profile.
The ratings of Federated Life reflect the company’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, neutral business profile and appropriate ERM. Federated Life has been an important part of the operations and allowed to offer comprehensive protection solutions to small commercial clients. However, Federated Life remains a relatively modest contributor to overall revenue and earnings of the organization.
The ratings of Federated Specialty reflect the company’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate ERM. Federated Specialty’s business growth has been behind the initial projections, but management is committed to take advantage of specialty market opportunities and add diversification to the organization.
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.
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