Best Affirms Factory Mutual and Subs ‘A+’ Ratings; Outlook Stable

September 21, 2012

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+’ (Superior) and issuer credit ratings (ICR) of ‘”aa” of Factory Mutual Insurance Company and its subsidiaries, Appalachian Insurance Company and Affiliated FM Insurance Company.

In a separate announcement A.M. Best Europe – Rating Services Limited affirmed the FSR of’ A+’ (Superior) and ICR of “aa” of UK-based FM Insurance Company Limited. All of the companies are members of FM Global Group and are domiciled in Johnston, Rhode Island, unless otherwise specified. The outlook for all of the ratings is stable.

The ratings reflect FM Global Group’s “excellent level of risk-adjusted capitalization, historically solid underwriting and operating performance, benefits gained from its innovative loss prevention process and approach to property conservation, as well as its market leadership position in the commercial property market,” Best explained.

As partial offsetting factors Best cited the FM Global Group’s “significant exposure and susceptibility to natural and man-made catastrophes. Furthermore, the group maintains high—although manageable—common stock leverage, which adds some volatility to its overall earnings and balance sheet.”

Best acknowledged that the FM Global Group is “a market leader among providers of commercial property insurance in the United States, serving a significant number of Fortune 1000 companies worldwide, many of which have been with the FM Global Group for more than 25 years.

“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 and shared commitment to property preservation.”

Best concluded that, “while the ratings for the group are stable, future positive rating actions may result from its continued strong underwriting and operating performance.

“However, negative rating actions could result if the group’s underwriting and operating performance falls markedly short of A.M. Best’s expectation along with a weakening in its overall risk-adjusted capitalization.”

Source: A.M. Best

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