A.M. Best Co. announced that it has affirmed the financial strength rating of “A+” (Superior) of the U.K.’s FM Insurance Company Limited (FMI) with a stable outlook.
“The rating reflects the implicit support of FMI’s ultimate parent, Factory Mutual Insurance Company (FMIC), a U.S.-based specialist property insurer,” said Best. “FMIC reinsures approximately 75 percent of FMI’s risks. Other rating factors include the company’s excellent risk adjusted capitalization, strong operating performance and distinctive business position.”
Best also said it “believes FMI’s risk-adjusted capitalisation is likely to remain excellent in 2005, despite having increased its net retention to approximately 20 percent in 2004 compared to 10 percent in 2003. Although the company is still highly reliant on reinsurance, FMI continues to have a comprehensive reinsurance programme in place with its parent company and a number of other highly rated third party reinsurers.”
Best indicated that it “anticipates strong operating performance in 2005 with a combined ratio of approximately 80 percent, translating into after-tax profits of £25 million ($43.5 million). This profit is significantly higher than in 2004 due to the absence of one-off items which impacted the 2004 results. Gross written premium is expected to remain stable in 2005 at approximately £570 million ($991.2 million) as rates in the business lines written by FMI are substantially flat, although A.M. Best anticipates some softening in late 2005 and in 2006.
“FMI continues to have a distinctive business profile as a leading underwriter of highly protected risks within the commercial property market, benefiting from its extensive loss control, risk management and engineering capabilities. The company writes business in the United Kingdom, continental Europe and Australia.”
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