AM Best reports it has has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings of “a-” (Excellent) of the members of the Philadelphia Contributionship Group that are domiciled in Philadelphia.
The members of the group are Germantown Insurance Co., The Philadelphia Contributionship Insurance Co. and The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, Inc.
AM Best said the credit ratings reflect the Contributionship’s balance sheet strength, which its analysts assess as “very strong,” as well as its “marginal operating performance, neutral business profile and appropriate enterprise risk management.”
The stable outlooks reflect several corrective actions the group has taken to refine the Contributionship’s business profile, and which AM Best said have gained traction and reduced severity in operating results over the past few years.
The recent actions cited by AM Best include aggressive rate increases, insurance to value measures, coastal mitigation strategies and agency management efforts. Furthermore, AM Best said the group has further enhanced its pricing sophistication through predictive modeling and use of third-party data.
In addition, AM Best said management considerably reduced the number of agents representing the group after reviewing and aligning values and goals.
Efforts to improve the underlying risks of the portfolio support the neutral business profile assessment, which also reflects the organization’s well-established presence within the Mid-Atlantic region with a niche focus on underserved urban and surrounding suburban markets.
AM Best added that the stable outlooks reflect its analysts’ expectation that the Contributionship will maintain very strong overall balance sheet strength supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), and sustained improvement in operating performance as compared with older years. Performance is expected to report moderate volatility given the group’s significant property exposure that subjects results to weather-related events and severe fire losses, partially mitigated by a prudent reinsurance program. Despite such volatility, the level of severity has dampened since 2019 due to management’s ongoing initiatives.
The insurance group writes property/casualty insurance for homeowners and multi-family dwellings principally in urban communities in Pennsylvania, New Jersey, Delaware, Maryland and Virginia.
2023 Annual Report
According to the company’s 2023 annual report, it had approximately 111,000 policyholders at December 31, 2023.
While claim frequency was down in 2023, the insurer continued to experience high severity, partly due to the intensity of some of the weather-related events, increased costs to repair damages, litigation costs, rising reinsurance costs and higher housing costs when people are displaced from their homes.
The group was impacted by 23 weather catastrophes in 2023, which resulted in more than 1,700 reported claims and generated an estimated $16.2 million in losses.
Losses and loss adjustment expenses, at $83.7 million, were improved 3.3% in 2023 compared to 2022. The insurance operation produced income before income taxes of $32.9 million last year.
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