Ratings agency, A.M. Best, has placed under review with developing implications the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of Wright National Flood Insurance Co. (WNFIC) of San Antonio, Texas.
These rating actions follow the recent announcement by WNFIC of the merger agreement between its ultimate parent, The Wright Insurance Group LLC (TWIG) and Brown & Brown Inc. (B&B).
Under the terms of the transaction and subject to regulatory approvals, B&B will acquire 100 percent of the membership interests of TWIG and its subsidiaries, with the exception of WRM America Indemnity Co. of Uniondale, N.Y. However, the proposed transaction does include WNFIC and Wright National Flood Insurance Services LLC.
The ratings of WNFIC reflect its adequate risk-adjusted capitalization and relatively favorable operating results, as well as governmental support. Offsetting these positive rating factors is the potential concentration of risk derived from excess flood policies, albeit small in nature, and changes in the macroeconomic environment.
WNFIC derives significant revenue and fee-based income from its book of non-risk-bearing National Flood Insurance Program (NFIP) business, as well as from its excess flood coverage. These factors are expected to significantly contribute to the company’s overall profitability. Upon completion of the proposed transaction with B&B, WNFIC is expected to continue its NFIP program.
Source: A.M. Best