AM Best upgrades Forestry Mutual Insurance Company’s credit ratings | Business Insurance

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OLDWICK, New Jersey–(COMMERCIAL WIRE)–I am better has upgraded Forestry Mutual Insurance Company’s (FMIC) Financial Strength Rating to A- (Excellent) from B++ (Good) and Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) (Raleigh, North Carolina). The outlook on these Credit Ratings (ratings) has been revised to stable from positive.

The ratings reflect FMIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and adequate enterprise risk management (ERM).

The ratings upgrade reflects the sustained improvement in FMIC’s balance sheet strength, which is supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). The improved assessment is the result of several factors: strong growth in the surplus of the insured during the last five-year period; strong liquidity metrics; favorable loss reserve trends; and maintaining a strong reinsurance program with manageable retention. In addition, the growth of the surplus, together with a lower premium base, has led to the reduction of technical leverage measures. AM Best expects FMIC’s operating profitability to continue to grow the company’s surplus base prospectively.

The ratings also reflect FMIC’s adequate operating performance, which is supported by disciplined underwriting practices and a conservative investment strategy. The limited business profile reflects the company’s position as a monoline workers’ compensation writer for the lumber and forestry industries, which exposes it to risks associated with the lumber industry, such as changes in demand for wood products. AM Best believes that the company’s ERM framework and risk management capabilities are appropriate for its risk profile. FMIC is recognized for its aggressive security and loss control processes, along with a commitment to the long-term stability of its members.

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