Press Release|Insurance
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KBRA Affirms Ratings for The Philadelphia Contributionship Operating Companies and The Philadelphia Contributionship Mutual Holding Company

5 Sep 2025   |   New York

Contacts

KBRA affirms the A- insurance financial strength ratings (IFSR) of The Philadelphia Contributionship For The Insurance Of Houses From Loss By Fire, Inc. (TPC), The Philadelphia Contributionship Insurance Company (PCIC), and Germantown Insurance Company (GIC; collectively, the Contributionship), as well as the BBB- issuer rating of The Philadelphia Contributionship Mutual Holding Company. The Outlook for all ratings is Stable.

Key Credit Considerations

The ratings of the Contributionship reflect strong risk-adjusted capitalization and conservative leverage, supported by surplus growth and low underwriting and reserve leverage. Capital strength is further reinforced by consistently favorable prior-year development, underscoring conservative practices. The group also benefits from a robust catastrophe reinsurance program, which provides protection near the 1-in-200 return period and limits tail risk, as well as a mature enterprise risk management framework, with board-level oversight, defined risk tolerances, and disciplined exposure management.

Balancing these strengths are the Contributionship’s elevated investment risk, with unaffiliated equities comprising approximately 74% of surplus at YE 2024, exposing earnings and capital to volatility despite steady recurring net investment income. Profitability metrics remain unfavorable, with more than five consecutive years of underwriting losses, though results have shown incremental improvement and management expects breakeven by 2026 through continued rate, ITV, and agency initiatives. Persistent concentration and large-loss severity in Pennsylvania weigh on overall results. In addition, execution risk remains as the company works to deliver on corrective actions and state-level initiatives necessary to achieve sustainable underwriting profitability.

Rating Sensitivities

Factors that could lead to an upgrade include further geographic diversification with sustained profitability, a multi-year track record of underwriting profitability with stable combined ratios, and a reduction in equity concentration.

Factors that could lead to a downgrade include a material and sustained reduction in risk-adjusted capitalization or a significant increase in leverage, prolonged deterioration in earnings performance, or an adverse shift in risk profile such as higher catastrophe exposure.

To access ratings and relevant documents, click here.

Click here to view the report.

Methodologies

Disclosures

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 www.kbra.com.

About KBRA

Kroll Bond Rating Agency, LLC (KBRA), one of the major credit rating agencies (CRA), is a full-service CRA 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 (DRO) by the Ontario Securities Commission for issuers of asset-backed securities to file a short form prospectus or shelf prospectus. KBRA is also recognized as a Qualified Rating Agency by Taiwan’s Financial Supervisory Commission and is recognized by the National Association of Insurance Commissioners as a Credit Rating Provider (CRP) in the U.S.

Doc ID: 1011023