New E&S carrier Federated Specialty secures A rating from AM Best

Federated Mutual Insurance Company has launched a new excess and surplus lines (E&S) carrier and the newly minted platform has been assigned a financial strength rating (FSR) of A (Excellent) from AM Best.

Called Federated Specialty Insurance Company, the new platform is the latest in a growing number of new entrants into the E&S space at a time when the flow of business from the admitted market shows little sign of letting up and the segment’s pricing remains high.

Along with the FSR of A, Federated Specialty has also secured a long-term issuer credit rating of “a” (Excellent).

The outlook on both of Federated Specialty’s ratings is stable.

The new launch represents an additional commitment to the E&S space for Owatonna, Minnesota-based Federated Mutual.

As The Insurer reported last month, Federated Life Insurance Company, a life insurance-focused subsidiary of Federated Mutual Insurance Company, issued a $7.5mn surplus note to support the growth plans of ReAlign Insurance Holdings’ surplus lines carrier Summit Specialty Insurance Company.

“The ratings of Federated Specialty reflect the company’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 agency said.

Federated Specialty’s ratings reflect its strategic importance to parent Federated Mutual, along with the common ownership and management, as well as the implicit and explicit support it receives from its owner.

Along with assigning the new ratings to Federated Specialty, AM Best has also affirmed the A+ FSR and “aa-“ long-term ICR of parent Federated Mutual and its main subsidiaries.

Federated Mutual writes various commercial property and casualty coverages throughout most of the continental US.

The agency said Federated Mutual’s ratings reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, favorable business profile and appropriate enterprise risk management.

As assessed by Best’s Capital Adequacy Ratio, AM Best said Federated Mutual maintains the strongest level of risk-adjusted capitalization, while the business is also supported by its conservative investment portfolio, favorable reserve development and strong reinsurance program.