OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A (Excellent) and the issuer credit rating (ICR) of “a+” of Frankenmuth
Mutual Insurance Company(Frankenmuth) and its affiliates, Ansur
America Insurance Company, Patriot Insurance Company (Yarmouth, ME), ASure
Worldwide Insurance Companyand Fortuity Insurance Company.
The outlook for the FSR is stable, while the outlook for the ICR has
been revised to negative from stable.
A.M. Best also has affirmed the FSR of A (Excellent) and ICR of “a” of Patriot
Life Insurance Company (Patriot Life), a subsidiary of Frankenmuth.
The outlook for both ratings is stable. All companies are domiciled in
Frankenmuth, MI, unless otherwise noted.
The affirmation of Frankenmuth’s ratings reflects its strong
risk-adjusted capitalization, solid regional market presence and
management’s ongoing efforts to reduce geographic concentration.
Further, the stable outlook on the FSR acknowledges Frankenmuth’s
historically profitable operations, strong agency relationships and A.M.
Best’s expectations that operating results will stabilize and surplus
growth will resume as a result of the corrective actions that have been
implemented. These include rate increases, agency management initiatives
and re-underwriting segments of its book of business.
The revised outlook for Frankenmuth’s ICR reflects the variability in
underwriting performance over the last five years, which has caused
operating performance to decline from historical levels. As a result,
the group’s return measures have fallen below those of the commercial
casualty industry composite. Most notably in 2008 and 2011, underwriting
results suffered due to increased storm losses and severity in the
personal automobile and workers’ compensation lines.
A.M. Best believes Frankenmuth is well positioned at its current FSR.
Negative rating action on Frankenmuth’s ICR may occur over the near to
mid term if there is a continued decline in the group’s underwriting
profitability and/or a considerable deterioration in its risk-adjusted
capitalization as measured by Best’s Capital Adequacy Ratio.
The ratings of Patriot Life reflect the formal guaranty issued by
Frankenmuth with respect to Patriot Life’s liabilities, as well as the
ongoing financial support provided by the parent. In addition, Patriot
Life maintains an investment portfolio that is of high credit quality
and provides the company with strong liquidity.
Partially offsetting these strengths are Patriot Life’s modest operating
profile, lack of scale and losses reported as it establishes a market
presence. Patriot Life is managing a closed block of ordinary life
business as well as a modest level of new business written during 2011.
A.M. Best believes Patriot Life is well positioned at its current
ratings. Downward rating pressure would occur if there was negative
rating action on its parent company. Rating pressure also may occur if
A.M. Best were to view Patriot Life as having lesser strategic value to
its parent company or if there is a significant drop in the reported
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: “Risk
Management and the Rating Process for Insurance Companies”;
“Understanding BCAR for Property/Casualty Insurers”; “Rating Members of
Insurance Groups”; “The Treatment of Terrorism Risk in the Rating
Evaluation”; and “Catastrophe Analysis in A.M. Best Ratings.”
Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.Adrienne Tortoriello, 908-439-2200, ext.
5088Financial Analyst[email protected]orJennifer
Marshall, 908-439-2200, ext. 5327Managing Senior Financial
Morrow, 908-439-2200, ext. 5378Senior Manager, Public
Peavy, 908-439-2200, ext. 5644Assistant Vice President,
Public Relations[email protected]
Source: A.M. Best Co.