AM Best has announced it downgraded one Florida insurance company’s financial strength rating, citing hurricanes and market conditions as the challenges for the company.
In a recent press release, the ratings house said Florida Family Insurance Company and its subsidiary Florida Family Home Company – which together makes up the two pool members of Florida Family Group – has been downgraded from A- (Excellent) to B++ (Good) in relation to its Financial Strength Rating.
The group’s Long-Term Issuer Credit Rating (Long-Term ICR) has also been downgraded to “bbb+” from “a-“.
These new ratings reflect Florida Family’s balance sheet strength, which AM Best categorizes as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
“The downgrades reflect deterioration in underwriting results in recent years that has resulted in performance metrics no longer supportive of a strong assessment,” AM Best said.
“Florida Family’s underwriting performance has been impacted negatively by hurricanes, a challenging Florida insurance market, which includes increases in the frequency and severity of water-related claims, and more recently, adverse loss reserve development.
“Furthermore, before a slight uptick in 2019, premiums had been declining due to a more competitive environment relative to the group’s strategic business platform of selectively offering wind and ex-wind products within Florida.”
According to the press release, Family has implemented a number of actions to improve performance, including rate increases, non-renewal of undesirable risks, the closure of new business in specific areas of Florida and the effective management of assignment of benefits issues.
The group recently launched a new homeowners insurance product, which has produced modest growth in the historical footprint and incremental writings in territories previously closed off to wind business.