Fla.’s Federated National Under Review

A.M. Best Co. has placed the financial strength rating of “B” (Fair) of Federated National Insurance Company of Plantation, Fla. under review with negative implications due to the company’s weakened capitalization and increasingly high leverage measures.

According to A.M. Best, Federated National’s surplus was impacted by losses incurred in its bond portfolio as well as an increase in its probable maximum loss associated with a 100-year storm. Additionally, through the first half of 2002, premium volume increased approximately 26 percent, and when combined with the decline in capital, elevated its leverage position. As a result, the company’s capital position falls below its current rating.

Federated National will remain under review pending discussions with management on corrective actions to restore its capital position and reduce leverage measures. A.M. Best expects to finalize this rating by the end of the third quarter.