AM Best Affirms Credit Ratings of Federated Underwriting Company

Rhea-AI Summary

AM Best has affirmed the Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Rating of “a-” (Excellent) for Federated Underwriting Company, with a stable outlook. These ratings reflect Federated’s strong balance sheet and adequate operational performance, along with appropriate enterprise risk management. The company, a captive formed by State Street Corporation in 2019, is designed to manage specific risks associated with its parent’s insurance programs. AM Best highlights credit enhancement from State Street, aligning interests and providing financial flexibility.

Positive

• Financial Strength Rating of A- (Excellent) affirmed by AM Best.
• Long-Term Issuer Credit Rating of 'a-' (Excellent) also affirmed.
• Stable outlook for the ratings indicating consistent performance.
• Strong balance sheet strength assessed as very strong by AM Best.
• Support from State Street Corporation enhances financial stability.

Negative

• Limited business profile due to focus on specific risks related to State Street's insurance programs.
• Historical operating performance remains undetermined since Federated is relatively new.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of “a-” (Excellent) of Federated Underwriting Company (Federated) (Colchester, VT). The outlook of these Credit Ratings (ratings) is stable.

The ratings reflect Federated’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings also reflect the credit enhancement received from its ultimate parent, State Street Corporation (State Street) [NYSE: STT].

This single-parent captive was formed and capitalized in 2019 as part of State Street’s alternative risk financing strategy in the wake of significant price firming in the insurance market. AM Best considers Federated’s business profile to be limited, and whose sole purpose is to take on specific risks related to its parent’s insurance programs. Being a relatively new company, Federated’s historical operating performance has yet to be determined. The operating performance assessment of adequate reflects AM Best’s neutral position until business matures and evolves. Consideration is also given to management’s projections and the ability to execute on these projections in conjunction with Federated’s overall mission and business plan.

Lastly, the ratings include a level of credit enhancement from State Street, one of the world’s largest financial service organizations. AM Best believes that given the captive nature of the business being insured, the interests of State Street and Federated are aligned directly, and additional capital and financial flexibility are available if necessary.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2023 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230113005312/en/

Fred Eslami

Associate Director

+1 908 439 2200, ext. 5406

fred.eslami@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Daniel J. Ryan

Senior Director

+1 908 439 2200, ext. 5325

daniel.ryan@ambest.com

Al Slavin

Senior Public Relations Specialist

+1 908 439 2200, ext. 5098

al.slavin@ambest.com

Source: AM Best

FAQ

What are the latest ratings for Federated Underwriting Company?

AM Best has affirmed Federated Underwriting Company's Financial Strength Rating of A- (Excellent) and Long-Term Issuer Credit Rating of 'a-' (Excellent).

What is the outlook for Federated Underwriting Company's credit ratings?

The outlook for Federated's credit ratings is stable.

What does State Street's involvement mean for Federated Underwriting Company?

State Street provides credit enhancement, aligning interests and ensuring financial flexibility for Federated.

When was Federated Underwriting Company formed?

Federated Underwriting Company was formed in 2019 as part of State Street's alternative risk financing strategy.

What is the business profile of Federated Underwriting Company?

Federated's business profile is considered limited, focusing solely on specific risks related to its parent company’s insurance programs.