Press Release|Insurance

KBRA Affirms Rating for Providence Mutual Fire Insurance Company

11 Apr 2024   |   New York


KBRA affirms the insurance financial strength rating (IFSR) of A- of Providence Mutual Fire Insurance Company (PMFIC). The Outlook for the rating is Stable.

Key Credit Considerations

The rating reflects solid risk adjusted capitalization, historically conservative underwriting leverage, sound liquidity, a high-quality bond portfolio, robust reinsurance, and an experienced management team. PMFIC's RBC ratio has been 786% or higher each of the last 5 years. The company also bolsters its balance sheet with a strong reinsurance program that protects the company to a 1-in-245 year event. PMFIC has underwriting leverage that has been lower than that of its peer group. Additionally, the company has strong liquidity ratios and a management team with extensive experience in the insurance industry. Offsetting these positive factors are unfavorable underwriting metrics, an elevated expense ratio, elevated equity investment allocation, and a limited market presence. Elevated combined ratios have been driven by poor personal auto results, catastrophe weather-related losses, large fire losses and an elevated expense ratio which compares unfavorably to peer averages. Providence Mutual has a limited market presence in the Northeastern United States and relies heavily on agency relationships to generate business.

Rating Sensitivities

Factors that could positively impact the rating include sustained profitable growth and stability in earnings, a consistent positive trend in organic surplus growth, or reporting improved underwriting metrics over an extended period. Factors that could negatively impact the rating include a significant deterioration in risk profile, a material reduction in capitalization, continued unfavorable earnings trends, a material deterioration in catastrophe reinsurance program, or a failure to meet management projections provided to KBRA.

To access rating and relevant documents, click here.

Click here to view the report.



Further information on key credit considerations, sensitivity analyses that consider what factors can affect these credit ratings and how they could lead to an upgrade or a downgrade, and ESG factors (where they are a key driver behind the change to the credit rating or rating outlook) can be found in the full rating report referenced above.

A description of all substantially material sources that were used to prepare the credit rating and information on the methodology(ies) (inclusive of any material models and sensitivity analyses of the relevant key rating assumptions, as applicable) used in determining the credit rating is available in the Information Disclosure Form(s) located here.

Information on the meaning of each rating category can be located here.

Further disclosures relating to this rating action are available in the Information Disclosure Form(s) referenced above. Additional information regarding KBRA policies, methodologies, rating scales and disclosures are available at

About KBRA

Kroll Bond Rating Agency, LLC (KBRA) is a full-service credit rating agency registered with the U.S. Securities and Exchange Commission as an NRSRO. Kroll Bond Rating Agency Europe Limited is registered as a CRA with the European Securities and Markets Authority. Kroll Bond Rating Agency UK Limited is registered as a CRA with the UK Financial Conduct Authority. In addition, KBRA is designated as a designated rating organization by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized by the National Association of Insurance Commissioners as a Credit Rating Provider.

Doc ID: 1003796

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