Best Affirms FM Global Group and Members ‘A+’ Ratings

September 26, 2011

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+’ (Superior) and issuer credit ratings (ICR) of ‘aa’ of FM Global Group (FM Global) and its members, which includes the lead company, Factory Mutual Insurance Company and its affiliates, Appalachian Insurance Company and Affiliated FM Insurance Company.

At the same time A.M. Best Europe – Rating Services Limited affirmed the FSR of ‘A+'(Superior) and ICR of ‘aa’ of the UK-based FM Insurance Company Limited (FMI). All of the U.S. companies are domiciled in Johnstown, Rhode Island. The outlook for all of the ratings is stable.

The affirmation of the ratings reflects FM Global’s “very strong capitalization, historically solid operating performance, benefits the entire group receives from its loss prevention technology and property conservation and its market leadership position in the commercial property market,” Best explained. In addition, FM Global “utilizes a very conservative approach to risk management that permeates all aspects of the group’s operations.”

As partial offsetting factors Best cited FM Global’s “recurrence of sizable premium credits to its insured members, its high investment leverage and ongoing exposure and susceptibility to future acts of terrorism as well as natural catastrophes. In 2011, FM Global’s results fell as a result of an increase in frequency and severity of large natural hazard losses, which are expected to add between 40 and 50 points to the consolidated group’s combined ratio.”

Factory Mutual, Appalachian and Affiliated FM are part of an intercompany pooling arrangement, with Factory Mutual being the lead pool member. Although FMI is not a pooling member, it receives significant support from Factory Mutual including, but not limited to, a stop-loss agreement. Best said “FMI is integral to the group’s strategy of providing insurance coverages to both its U.S. clients’ international operations and sovereign companies in their country of origin.”

In addition Best described FM Global as a “market leader among providers of commercial property insurance in the United States serving a significant number of Fortune 1000 companies worldwide.

“The group’s ability to consistently retain more than 90 percent of its policyholders is a result of its stable capacity, unmatched engineering, global reach, loss prevention technology, shared commitment (with its policyholders) to property preservation and the strategic use of membership credits.

“FM Global remains one of the prominent underwriters of highly protected risks within the commercial property market and is widely recognized throughout the industry for its extensive loss control, risk management and engineering capabilities.”

Source: A.M. Best

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