AM Best Downgrades Credit Ratings of Finger Lakes Fire and Casualty Company

AM Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “a” (Excellent) of Finger Lakes Fire and Casualty Company (Finger Lakes) (Trumansburg, NY). The outlook of these Credit Ratings (ratings) is negative.

The ratings reflect Fingers Lakes’ 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 downgrade of these ratings reflects the ongoing pressure given the volatility in the company’s operating results in recent years due to high geographic concentration of risk that exposes its results to potential judicial, economic, or regulatory challenges. These results are also exposed to frequent and severe weather-related events due to its status as a single-state writer with a concentration in the property lines of business. Finger Lakes’ operating performance in recent years and through September 2024 were challenged by reserve strengthening, adverse reserve development, higher than expected verdicts (social inflation), and a number of freeze claims.

The negative outlooks reflect Finger Lakes’s prolonged negative trend in operating results as well as AM Best’s concern over the company’s declining operating performance in recent years. The volatility in the company’s results continued through the third quarter of 2024 and was fueled by adverse reserve development, higher than expected jury verdicts and the severity of weather-related losses driven by inflationary pressures. The company has a long-standing presence in New York and an experienced management team. However, Finger Lakes remains susceptible to frequent and severe weather-related losses and potentially adverse judicial, regulatory, and economic challenges.

Finger Lakes’s management is addressing the underwriting volatility through rate increases, re-underwriting of its book of business, inflation guard adjustments, non-renewing unprofitable accounts and in-depth loss control inspections. AM Best expects that these actions will take time to reverse the negative trends and for the metrics to return to its historical norms.

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.

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