AM Best Revises Outlooks to Negative for United Fire Group, Inc. and Its Property/Casualty Subsidiaries
OLDWICK, N.J.--(BUSINESS WIRE)--Dec 17, 2020--
AM Best has revised the outlooks to negative from stable and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of the property/casualty (P/C) subsidiaries of United Fire Group, Inc. (UFG) [NASDAQ: UFCS] (collectively known as United Fire & Casualty Group), which operate under an intercompany pooling agreement led by United Fire & Casualty Company. Concurrently, AM Best has revised the outlook to negative from stable and affirmed the Long-Term ICR of “bbb” of UFG. All companies are headquartered in Cedar Rapids, IA. (See below for a detailed listing of the companies and ratings.)
The Credit Ratings (ratings) reflect United Fire & Casualty Group’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management. The negative outlooks reflect the group’s downward trend in recent underwriting performance, stemming from numerous catastrophe events as well as reserve strengthening in the commercial auto liability line in 2019. While the group is executing on an enterprise-wide strategic plan to improve operational and financial performance, it faces execution risk due to competitive market conditions and ongoing exposure to catastrophe events, which also could potentially result in continued pressure on balance sheet fundamentals.
The ratings also reflect the group’s solid risk-adjusted capitalization, diversified product offerings, historically favorable core reserve levels, long-standing agency relationships, solid regional franchise and the financial flexibility afforded by UFG. These positive rating factors are offset partially by the variability in United Fire & Casualty Group’s underwriting and operating results in recent years, driven primarily by continued challenging market conditions, particularly in its commercial auto liability line of business, and exposure to catastrophe and weather-related losses. The Long-Term ICR of UFG recognizes the capital strength of its subsidiaries and that it has no outstanding debt.
The FSR of A (Excellent) and the Long-Term ICRs of “a” have been affirmed with outlooks revised to negative from stable for United Fire & Casualty Company and its following P/C subsidiaries:
- Lafayette Insurance Company
- Addison Insurance Company
- United Fire & Indemnity Company
- United Fire Lloyds
- Mercer Insurance Company
- Financial Pacific Insurance Company
- Mercer Insurance Company of New Jersey, Inc.
- Franklin Insurance Company
- UFG Specialty Insurance Company
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.
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PUB: 12/17/2020 04:58 PM/DISC: 12/17/2020 04:58 PM