OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has revised the outlook to negative from stable for the Long-Term Issuer Credit Rating (Long-Term ICR) and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term ICR of “a+” of Finger Lakes Fire and Casualty Company (Finger Lakes) (Trumansburg, NY). The outlook of the FSR is stable.
The Credit Ratings (ratings) reflect Finger Lakes’ balance sheet strength, which AM Best categorizes as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management.
The revised Long-Term ICR outlook to negative is the result of unfavorable trends in Finger Lakes’ operating results. These trends in operating results have led to an elevated combined ratio over the past several years, which is reflective of the company’s overall diminished profitability metrics. Consequently, it now compares unfavorably with peer companies that have an operating performance assessment classified as strong. In addition, reserves have been inadequate, which in years like 2019, have had an outsized impact on the company’s combined ratio given the need to strengthen reserves throughout the fiscal year. These trends have diminished Finger Lakes’ overall five-year profitability ratios to a level more reflective of those companies that have an operating performance assessment of adequate. However, for the time being, operating performance is still categorized as strong. Prospectively, the negative Long-Term ICR outlook will be resolved depending on the continued trend in Finger Lakes’ five-year average profitability ratios coupled with trends observed in the company’s reserve adequacy.
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