A.M. Best Affirms Ratings of Fireman’s Fund Insurance Company and Its Affiliates

  A.M. Best Affirms Ratings of Fireman’s Fund Insurance Company and Its
  Affiliates

Business Wire

OLDWICK, N.J. -- July 10, 2013

A.M. Best Co. has affirmed the financial strength rating (FSR) of A
(Excellent) and issuer credit ratings (ICR) of “a” of Fireman’s Fund Insurance
Company (FFIC) (Novato, CA) and its reinsured affiliates, collectively
referred to as Fireman’s Fund. The outlook for all ratings is stable. (See
below for a detailed listing of the companies.)

At the same time, A.M. Best has withdrawn the ICR of “a-” of FFIC’s immediate
parent, Allianz of America, Inc. (Delaware), reflecting its status as a
private, intermediate holding company.

The ratings reflect Fireman’s Fund’s supportive level of risk-adjusted
capitalization, strong brand recognition and market expertise within specialty
commercial lines and high net worth individuals. Furthermore, the ratings
recognize the strategic importance of Fireman’s Fund’s U.S. market presence to
the global insurance operations of Allianz Societas Europaea (Allianz SE), its
Germany-based ultimate parent. The ratings of Fireman’s Fund reflect the
substantial explicit and implicit support of Allianz SE, which is demonstrated
by capital contributions and critical reinsurance.

These positive rating factors are offset by the deterioration in Fireman’s
Fund’s underwriting performance in recent years due to increased catastrophe
losses and significant adverse reserve development of prior years’ loss
reserves. Underwriting losses, coupled with declining net investment income,
have resulted in net operating losses in both 2011 and 2012. Most notably, in
2012, a combination of multi-peril crop losses, Superstorm Sandy-related
losses and adverse reserve development contributed to the organization’s poor
underwriting results. Management continues to take corrective actions to
improve results; however, it is expected it will take several years for
Fireman’s Fund to return to consistent profitability. A.M. Best expects that
Allianz SE will continue to provide support to Fireman’s Fund, helping to
maintain a level of capital that will remain supportive of its ratings as
management’s initiatives take effect.

A.M. Best believes that Fireman’s Fund is adequately positioned at its current
rating level and does not anticipate favorable rating actions in the near to
midterm. Negative rating actions may occur for Fireman’s Fund over the near to
midterm if there is a continued decline in its underwriting profitability,
considerable deterioration in its risk-adjusted capitalization as measured by
Best’s Capital Adequacy Ratio or if A.M. Best determines that Fireman’s Fund’s
strategic importance to Allianz SE no longer warrants the current level of
rating enhancement.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for Fireman’s Fund
Insurance Company and its following reinsured affiliates:

  *American Automobile Insurance Company
  *National Surety Corporation
  *The American Insurance Company
  *Associated Indemnity Corporation
  *Chicago Insurance Company
  *Fireman’s Fund County Mutual Insurance Company
  *Fireman’s Fund Indemnity Corporation
  *Fireman’s Fund Insurance Company of Hawaii, Inc.
  *Fireman’s Fund Insurance Company of Ohio
  *Interstate Fire & Casualty Company

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. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.

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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

Contact:

A.M. Best Co.
Adrienne Tortoriello
Senior Financial Analyst
(908) 439-2200, ext. 5088
adrienne.tortoriello@ambest.com
or
Jennifer Marshall
Managing Senior Financial Analyst
(908) 439-2200, ext. 5327
jennifer.marshall@ambest.com
or
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com
 
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