OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of B (Fair) and issuer credit ratings of “bb+” of Fire Districts of New York Mutual Insurance Company, Inc. and its subsidiaries, FDM Preferred Insurance Company, Inc. and Fire Districts Insurance Company, Inc. These companies are collectively known as Fire Districts Group (FDG) and are all domiciled in Chestnut Ridge, NY.
The ratings reflect FDG’s good capitalization, high member retention, implementation of strict loss controls and underwriting guidelines and above average operating returns from its relatively small direct book of business. Partially offsetting these positive rating factors are FDG’s elevated underwriting leverage and its current geographic concentration.
The ratings also reflect FDG’s niche focus and market leadership position in underwriting volunteer firefighters’ benefit law and the related workers’ compensation coverage in New York State. FDG estimates that it insures approximately 40% of all volunteer firefighters in the state. Moreover, the ratings take into consideration FDG’s increasing profitability and operating stability.
A.M. Best remains concerned with the possibility of adverse development given the long-tail nature of the business and will continue to monitor the future impact of FDG’s profitability. A.M. Best is encouraged by management’s implementation of more stringent loss controls and underwriting strategies.
FDG’s ratings are not expected to be upgraded nor its outlook revised within the next 12 months. A.M. Best could downgrade the ratings and/or revise the outlook if FDG records significant deterioration in its capital from either claims or investments, a reduced level of capital that does not support the ratings or a prolonged decline in underwriting profitability.
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”; and “Rating Members of Insurance Groups.” 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 RESERVED.
A.M. Best Co.
Janet Hernandez, 908-439-2200, ext. 5767
Senior Financial Analyst
Steven Chirico, CPA, 908-439-2200, ext. 5087
Assistant Vice President
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
Source: A.M. Best Co.