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A.M. Best Affirms Ratings of Fireman's Fund Insurance Company and Its Affiliates

July 21, 2014



ENP Newswire - 21 July 2014

Release date- 18072014 - A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit ratings of 'a' of Fireman's Fund Insurance Company (FFIC) (Novato, CA) and its reinsured affiliates, collectively referred to as Fireman's Fund.

The outlook for all ratings is stable. (See below for a detailed listing of the companies.)

The ratings reflect Fireman's Fund's strong brand recognition and expertise within specialty commercial lines and high net worth individuals, coupled with its supportive level of risk-adjusted capitalization. In addition, the ratings recognize Fireman's Fund's strategic importance to the global insurance operations of its ultimate parent, Allianz Societas Europaea (Allianz SE) (Germany). The ratings also take into account the substantial explicit and implicit support which Allianz SE provides, as demonstrated by significant reinsurance and capital contributions.

Offsetting these positive rating factors is Fireman's Fund's underwriting performance in the majority of the past five years, which was not in line with its historical levels or peer composite averages due to increased weather-related and catastrophe losses, along with adverse development of loss reserves. Most notably, a combination of multi-peril crop losses, Superstorm Sandy-related losses and adverse reserve development in 2012 contributed to the organization's poor underwriting results. Management has taken corrective actions to improve results, which was reflected in the group's smaller underwriting loss and improved operating income in 2013. It is A.M. Best's expectation that it will take several years for Fireman's Fund to return to a consistent level of profitability. Furthermore, A.M. Best expects that Allianz SE will continue to provide support to Fireman's Fund, helping to maintain a level of capital that will remain supportive of its ratings as management initiatives continue to take hold.

A.M. Best does not anticipate favorable rating movement for Fireman's Fund in the near to midterm. Negative rating actions may occur if underwriting profitability does not continue to show sustainable improvement or if there is a considerable decline in risk-adjusted capitalization. In addition, if A.M. Best determines that Fireman's Fund's strategic importance to Allianz SE no longer warrants the current level of rating enhancement, there could be negative pressure.

The FSR of A (Excellent) and ICRs of 'a' have been affirmed for Fireman's Fund Insurance Company and its following reinsured affiliates:

American Automobile Insurance Company

National Surety Corporation

The American Insurance Company

Associated Indemnity Corporation

Chicago Insurance Company

Fireman's Fund Indemnity Corporation

Fireman's Fund Insurance Company of Hawaii, Inc.

Fireman's Fund Insurance Company of Ohio

Interstate Fire & Casualty Company

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. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology .

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

A.M. Best's credit ratings are independent and objective opinions, not statements of fact. A.M. Best is not an Investment Advisor, does not offer investment advice of any kind, nor does the company or its Ratings Analysts offer any form of structuring or financial advice. A.M. Best's credit opinions are not recommendations to buy, sell or hold securities, or to make any other investment decisions. View our entire notice for complete details.

A.M. Best receives compensation for interactive rating services provided to organizations that it rates. A.M. Best may also receive compensation from rated entities for non-rating related services or products offered by A.M. Best. A.M. Best does not offer consulting or advisory services. For more information regarding A.M. Best's rating process, including handling of confidential (non-public) information, independence, and avoidance of conflicts of interest, please read the A.M. Best Code of Conduct.

A.M. Best - Europe Rating Services Limited (AMBERS), a subsidiary of A.M. Best Company, is an External Credit Assessment Institutions (ECAI) in the European Union (EU). Therefore, credit ratings issued by AMBERS may be used for regulatory purposes in the EU as per Directive 2006/48/EC.


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Source: ENP Newswire


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