A.M. Best Co. announced that it has affirmed the financial strength rating of A+ (Excellent) of U.K.-Based FM Insurance Company Limited (FMI) with a stable outlook.
“The rating reflects FMI’s superior business position and operating performance, maintenance of superior stand-alone risk-adjusted capitalisation, and its status as a core subsidiary of its ultimate parent, Factory Mutual Insurance Company (FMIC), currently rated ‘A+’ (Superior) with a stable outlook,” said Best. “The main offsetting factor is the company’s limited diversification by business line.”
Best noted that the company’s superior business position is supported by “its role within the FM Global group, which is one of the prominent underwriters of highly protected risks within the commercial property market.” The rating agency believes this affords the company “a distinct competitive advantage by virtue of its professional inspection, risk management and loss prevention services.”
Best indicated that “2003 earnings are expected to continue at a superior level due to a solid underwriting performance, reflecting improved pricing and the company’s focus on underwriting discipline and detailed risk assessment.” It anticipates continued “superior performance in the medium term with a combined ratio below 95 percent in 2003 and 2004, subject to normal loss experience.”
Commenting on FMI’s stand-alone risk-adjusted capitalisation, Best said it expected that it would “remain at the superior level at year end 2003 and 2004 while supporting net premium growth of approximately 300 percent over this period.” The increase is expected to be achieved as a result of capital growth through net retained earnings.
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