FCCI's Financial Keys to Success

Our Agency Partners
At FCCI, the financial keys to success begin with our agents. Our independent agents are knowledgeable in their local markets, they understand their customers’ needs, and they provide the initial assessment our underwriters need to help control business risk. In addition, their knowledge and understanding of FCCI’s product offerings and corporate philosophy create exceptional success in writing and retaining good business, which translates to lower expense ratios for the company and, over time, greater savings for the policyholder.

Our Underwriting Philosophy
Controlling risk is a paramount concern for FCCI and the policyholder. We underwrite the policyholder’s risk carefully to ensure we receive the appropriate premium for the risk we accept. In addition, our loss control representatives carefully analyze the exposures presented and provide suggestions to business owners for proper controls of specific risks. As an underwriting company, rather than relying solely on investment income, FCCI seeks to reduce losses and make a fair profit through conscientious risk management.

Our Claims Philosophy
At FCCI, how we handle a claim is a vital element of our financial success. FCCI is in the business of paying claims fairly and expeditiously. It is up to us to fulfill our promise to the policyholder. To do this, we carefully evaluate the merit of each claim and hold adequate reserves based on our evaluation. Our claims professionals are trained to expedite the claim to ensure proper handling and timely payments. This philosophy ensures proper allocation of reserves and payments that favorably impact our financial bottom line.

Our Catastrophe Management
Being in the business of protecting business, property and people, FCCI understands catastrophe loss potential. While our thoughtful underwriting limits our exposure in this area, catastrophic losses will occur. In the event of a catastrophe, reinsurance plays a part in minimizing the overall financial impact on the company. We partner with exceptional reinsurance companies that specialize in providing this important coverage.

A.M. Best Rating

FCCI’s Rating
A.M. Best Company has assigned an A- (Excellent) rating and Financial Size Category of Class IX to the FCCI Insurance Group. Furthermore, A.M. Best has qualified FCCI’s rating with a Stable outlook. The outlook reflects FCCI’s improved operating results and continued strong capital position that continues to support its expansion initiatives.

A.M. Best Rating Organization
Founded in 1899, A.M. Best Company is the oldest and most widely recognized rating authority dedicated to the insurance industry. A.M. Best provides the most comprehensive insurance ratings coverage of any rating agency, with reports and ratings on over 7,500 insurance entities worldwide, in approximately 65 countries. A.M. Best’s mission statement is “To perform a constructive and objective role in serving the insurance marketplace as a source of reliable information and ratings dedicated to encouraging a financially strong industry through the prevention and detection of insurer insolvency.”

Assignment of Best Ratings
The assignment of A.M. Best’s financial strength rating involves a comprehensive quantitative and qualitative analysis of a company’s balance sheet strength, operating performance, and business profile. The quantitative evaluation is based on the company’s reported financial performance, with over 100 key financial tests and supporting data. FCCI has a strong balance sheet that reflects improved performance. This strong and improving performance enables FCCI to maintain the business profile of a premier regional property and casualty company.

Underwriting Leverage
Underwriting leverage of an insurance company is important to analyze trends and magnitudes. The factors considered are: types of business written, spread of risk, quality and appropriateness of the reinsurance program, quality and diversification of assets, and adequacy of loss reserves. At FCCI, the types of business written are: agriculture-related risks (farmowners and commercial agribusiness), automobile, crime, general liability, inland marine, property, workers’ compensation, and umbrella policies, with spread of risk over 14 states. FCCI’s reinsurance program is solid, with strong quality and appropriate diversifications of assets. In addition, FCCI’s loss reserving has proven to be superior for the industry. According to Best’s Insurance Reports, Report Revision Date: 05/29/2009, FCCI's rating "recognizes FCCI's historically conservative loss reserving standards that have allowed for substantial favorable development on prior accident years."

Capitalization Tests
Many of the financial tests performed by A.M. Best review capitalization by the insurance company. With strong results in net, gross, and ceded reinsurance leverage, FCCI demonstrates the ability to minimize pricing errors and appropriately use reinsurance on its products. In addition, Best’s Capital Adequacy Ratio (BCAR) compares an insurer’s adjusted surplus to the required capital necessary to support its operating and investment risks. FCCI's BCAR score of 230.2 is well above A.M. Best's established minimum of 130 for an A- (excellent) rating.

Reserve Quality
Reserve quality is another indicator reviewed by A.M. Best. FCCI continues to conservatively set reserves within the higher end of the actuarial range. In addition, we do not discount workers' compensation loss and allocated adjustment expense reserves, although many other insurance companies do. FCCI has recorded substantial favorable development in each of nine prior calendar years by following this practice. FCCI’s focus on claims management, enhanced risk selection, and solid underwriting fundamentals create favorable reserving trends.

Reinsurance Program
Reinsurance plays an essential role in the risk-spreading process and provides insurers with varying degrees of financial stability. A company’s reinsurance program should be appropriate relative to its business, its policy limits, its underwriting risks, its catastrophe exposures, and its financial capacity. In addition, a reinsurance program should include reinsurers of good credit quality, because in the event of a reinsurer’s failure to respond to its share of a loss, the company would have to absorb a potential large loss in its entirety. FCCI’s reinsurance program involves treaty and facultative reinsurance with several of the top reinsurers in the marketplace. FCCI’s catastrophe program provides coverage against all perils, including earthquake.

Asbestos & Environmental Reserves
Unlike many insurance companies, FCCI, with a high percentage of its exposure in workers’ compensation, property, and automobile policies, has minimal asbestos and environmental (A&E) reserves. This diminished impact upon FCCI’s reserves is a favorable factor in relation to the overall results of the company.

Insurance Performance
Insurance performance deals with uncertainty of risk, and the better a company can forecast outcomes, the more viable the company’s results. Predictive modeling provides FCCI with a tool to assess our outcomes with the strategies we create. FCCI’s strategies are consistent with our outcomes, making a stable, vibrant company for our agents and policyholders.

FCCI and the Future
Financial strength allows FCCI to better protect and serve our agents and policyholders. FCCI has positioned itself for diversification as well as growth opportunities by expanding into additional states and offering new products. FCCI currently writes business in 15 states. In 2011, we expanded into Virginia. In 2012, we will expand into Maryland and Texas with other states to follow.

FCCI Insurance Group remains true to those core values that our policyholders and agents have come to expect from us — Loyalty, Integrity, Vision, Excellence, and Service. We believe that our commitment to these core values will continue to make FCCI a leading carrier of choice.