FM Global receives high A.M. Best credit ratings

Identifying it as a “market leader” in the commercial property market,” A.M. Best Co. has assigned FM Global an issuer credit rating of “AA,” or very strong, and affirmed its “superior” financial strength rating of A+.
A.M. Best also said FM Global has a stable outlook in both areas.
An A+ rating is assigned to those insurers with “a very strong ability to meet their ongoing obligations to policyholders,” according to A.M. Best’s Web site. The ratings are independent opinions, based on a comprehensive quantitative and qualitative evaluation of a company’s balance sheet strength, operating performance and business profile.
FM Global, which is based in Johnston, is one of the world’s largest commercial and industrial property insurance and risk management organizations, specializing in property protection.
A.M. Best said its ratings for FM Global reflected the insurer’s “extremely strong capitalization, solid operating and underwriting performance which benefit from the group’s exceptional loss prevention technology and property conservation approach, as well as its market leadership position in the commercial property market.”
The rating agency noted that these factors are offset by “the recurrence of sizable membership credits and ongoing exposure and susceptibility to future acts of terrorism as well as natural catastrophes,” but it added that it expects “solid earnings and cash flows over the near term will continue to grow FM Global’s invested asset base.”
FM Global serves a significant number of Fortune 1,000 companies worldwide, many of which have been with the group for more than 25 years, and it retains more than 90 percent of its policyholders, A.M. Best added.
The company’s net income for 2006 was $737 million, up 16 percent from $635 million in 2005. Policyholder surplus grew from $4.4 billion to $5.2 billion. FM Global credited its “better-than-expected operating performance” to lower-than-expected natural disaster losses.
“Given our strong capital base, operating record and mutual ownership, we have continued to offer our products and services at pre-Hurricane Katrina levels, unlike most of our competitors, while increasing surplus, maintaining our strong financial ratings and retaining clients,” Chairman and CEO Shivan S. Subramaniam said in a news release.