A.M. Best has affirmed the financial strength rating of A- (Excellent) and the long-term issuer credit rating of “a-” of Wright National Flood Insurance Co. (WNFIC) in San Antonio, Texas. The outlook of these credit ratings (ratings) is stable.
The ratings reflect WNFIC’s strong risk-adjusted capitalization and favorable operating results, as well as the support provided by its ultimate parent, Brown and Brown Inc. and its exclusive reinsurance arrangement with the Federal Emergency Management Agency (FEMA).
Offsetting these positive rating factors are the inherent challenges and risk related to its narrow business profile and its heavy dependence on the National Flood Insurance Program (NFIP), which is critical to its core business. The company also has some potential net risk exposure from its excess flood book. Potential changes related to NFIP or FEMA rules related to Write Your Own (WYO) Program selection practices also could pose a challenge to WNFIC.
NFIP is up for renewal in September 2017. WNFIC derives significant revenue and fee-based income from its book of non-risk-bearing NFIP business, as well as from its excess flood coverage. These are expected to contribute significantly to the company’s overall profitability.
A.M. Best views WNFIC’s experienced management and corporate strategy as major factors that strengthen its ratings, given the company’s conservative underwriting, operational goals and transparency. A.M. Best also views WNFIC’s enterprise risk management (ERM) practices as adequate, given the company’s experience in this sector, its conservative risk culture and defined risk controls.
A.M. Best expects WNFIC’s future operating performance to be strong, with a stable earnings profile that should further support the efforts to control its growth and business writings, which are consistent with its capital and surplus position.
Source: A.M. Best