AM Best lowers the credit ratings of independent fire insurance mutual


OLDWICK, New Jersey – (COMMERCIAL THREAD) –AM Best downgraded the financial strength rating (FSR) to B ++ (good) from A- (excellent) and the issuer’s long-term credit rating (long-term ICR) to “bbb +” (good) from “a- (Excellent) from Independent Fire Insurance Mutual (IMFCO) (Chicago, IL). The outlook for the long-term ICR has been revised from stable to negative, while the outlook for the FSR is stable.

Credit ratings (ratings) reflect the strength of IMFCO’s balance sheet, which AM Best considers to be very strong, as well as its adequate operational performance, limited business profile and appropriate enterprise risk management (ERM).

The downgrade of IMFCO’s ratings is based on a deterioration in the strength of its balance sheet, as measured by Best’s capital adequacy ratio (BCAR). The deterioration was caused by a substantial decline in insured surplus in conjunction with a significant increase in premium underwriting through the second quarter of 2021 due to IMFCO joining a supported property reinsurance arrangement from January 1, 2021 to December 31, 2021 and renewable annually, with a home insurer mainly in Texas. This quota arrangement exposed IMFCO to alleged large losses caused by winter storm Uri by Texas homeowners in the first quarter of 2021 and significant wind and hail losses from Texas homeowners in the second quarter. 2021. The writings of the Texas homeowners, which are currently in runoff.

However, IMFCO’s balance sheet strength assessment remains at a very high level, supported by its highest level of risk-adjusted capitalization as measured by BCAR, moderate underwriting leverage and strong liquidity measures. IMFCO also increased its catastrophe reinsurance coverage as of June 1, 2021, in order to partially mitigate the increased exposure to losses.

The revised long-term ICR outlook from negative to stable is based on a significant deterioration in operating performance reported by IMFCO through the second quarter of 2021, primarily due to becoming a participant in the deal. suspected real estate reinsurance, which exposes it to significant losses caused by storms from Texas homeowners. . In addition, IMFCO’s underwriting results continue to be affected by a high underwriting expense ratio relative to its industry composite average. In addition, the negative long-term outlook for ICR is based on AM Best’s concerns about ERM, as IMFCO significantly increased its risk profile in 2021 by becoming primarily an assumed real estate reinsurance insurer through its participation in the owners’ quota sharing agreement. The FSR outlook of stable reflects AM Best’s expectation that IMFCO will maintain a very high balance sheet strength assessment over the medium term.

This press release relates to credit ratings published on the AM Best website. For all rating information relating to the publication and relevant disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this publication, please see AM Best’s Recent Rating Activity webpage. . For more information on the use and limitations of credit rating reviews, please see Best’s Guide to Credit Ratings. For more information on the proper use of Best Credit Ratings, Best Preliminary Credit Ratings, and AM Best press releases, please see the Guide to Appropriate Use of Best Ratings and Ratings.

AM Best is a global credit rating agency, news publisher, and data analytics provider specializing in the insurance industry. Based in the United States, the company operates in more than 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

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