AM Best has revised the outlooks of Florida Family Insurance Company and its subsidiary, Florida Family Home Insurance Company, from negative to stable, a move that reflects improvement in its operating performance due to more strict underwriting guidelines.
Together, Florida Family Insurance Company and Florida Family Home Insurance Company, make up the two pool members of Florida Family Group (Florida Family).
“The revised outlooks to stable from negative reflect improvement in Florida Family’s operating performance metrics due to management’s various initiatives and recently implemented legislative changes to tort reform,” AM Best stated.
Attempting to lower the probable maximum loss and subsequent reinsurance needed, as well as improving the overall risk characteristics of the book business in order to produce more dependable results, Florida Family implemented a wind exposure reduction effort.
This effort, which began in 2022, was launched due to rising reinsurance costs, elevated weather events and an uncertain claims environment.
“The wind exposure initiative focused on limiting exposure to older roofs, as well as policies in southern coastal counties. Based on this initiative, a positive trend in the group’s key operating performance metrics has been demonstrated,” the rating agency noted.
“Additionally, assignment of benefits reforms and more broadly, one-way attorney’s fees legislation was enacted in December 2022, which has mitigated the level of exposure. As a result, a positive trend in litigated cases is noted leading to improved performance in Florida’s marketplace and within Florida Family’s results,” it added.
Moreover, these more stringent underwriting guidelines have helped Florida Family’s improved performance by driving organic surplus growth and strengthening risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR).
AM Best’s expects all these initiatives to continue to stabilise previously reported volatility in operating performance metrics.
The agency also affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Ratings of “bbb” (Good) of Florida Family.
According to AM Best, these ratings reflect Florida Family’s balance sheet strength, which it assesses as strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).
Analysts noted that the limited business profile reflects the limited geographic spread of risk in Florida. An appropriate ERM program is maintained through risk appetite and tolerance statements with risk management capabilities appropriately aligned with the concentrated risk profile.
