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AM Best Downgrades Credit Ratings of Members of Philadelphia Contributionship Group
[March 24, 2020]

AM Best Downgrades Credit Ratings of Members of Philadelphia Contributionship Group

AM Best has downgraded the Financial Strength Rating to A- (Excellent) from A (Excellent) and the Long-Term Issuer Credit Ratings to "a-" from "a" of Germantown Insurance Company, The Philadelphia Contributionship Insurance Company and The Philadelphia Contributionship for the Insurance of Houses from Loss by Fire, Inc., which are members of the Philadelphia Contributionship Group (the Contributionship). All companies are domiciled in Philadelphia, PA. The outlook of these Credit Ratings (ratings) remains negative.

The ratings reflect the Contributionship's balance sheet strength, which AM Best categorizes as very strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The rating downgrades reflect a revision in AM Best's assessment of the Contributionship's operating performance to marginal from adequate, given the deterioration of underwriting results over the most recent five-year period. The Contributionship has responded by initiating several corrective actions such as rate increases, targeted non-renewals and stricter underwriting guidelines; however, results have not yet benefited from these actions.

The Contributionship's balance sheet strength reflects the strongest level of risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR), a comprehensive reinsurance program and historically favorable reserve development.

The negative outlooks, however, reflect pressure on the overall balance sheet strength given the Contributionship's elevated common stock leverage and the recent downturn in equity markets, which could result in a sizable decline in the company's risk-adjusted capitlization should the market not rebound over the near term.

The Contributionship's operating performance continues to experience volatility, largely related to weather-related losses and increased fire claims. The neutral business profile reflects the organization's long-standing market position in the Mid-Atlantic personal property insurance market, serving a niche market of underserved urban areas. The Contributionship also benefits from an appropriate ERM program that supports the risk profile of the organization.

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 media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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