AM Best Revises Outlooks to Positive for Forge Insurance Company

AM Best has revised the outlooks to positive from stable and affirmed the Financial Strength Rating of B++ (Good) and the Long-Term Issuer Credit Rating “bbb+” (Good) of Forge Insurance Company (Forge) (District of Columbia).

The Credit Ratings (ratings) reflect Forge’s balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, limited business profile and appropriate enterprise risk management.

The positive outlooks reflect AM Best’s expectation for improvement in Forge’s operating results as it executes on its revised strategy. The company is in the process of transforming its book of business from legacy public auto risks toward commercial auto for artisan contractors and other small- to medium-size businesses, which management believes are subject to lower claims frequency. Further, claims severity is expected to be managed through targeting business primarily in favorable geographic locations within this segment.

Although Forge has reported underwriting losses in most recent years, these were primarily driven by non-recurring items, capital expenditures and other expenses in support of this strategic growth initiative. The management team has been strengthened significantly through onboarding various industry veterans. In addition, Forge has developed a straight-through-processing underwriting approach for risks that meet certain criteria, with actuarially driven rates. The company’s loss ratio volatility has decreased materially and its discontinued operations, which led to the marginal operating performance assessment, have effectively run-off. AM Best expects Forge’s currently elevated underwriting expense ratio to normalize as the company grows into this new segment through its scalable information technology-driven platform.

Positive rating action may occur with sustained improvement in underwriting and operating performance while maintaining the strongest level of risk-adjusted capitalization as the company executes its strategic plans to expand into new vehicle classes and jurisdictions within the commercial auto segment.

Negative rating action may occur if there is a material erosion of the company’s risk-adjusted capitalization or overall balance sheet strength. This may occur due to execution risk associated with transitions in the company’s business plan, excessive growth or inadequate reserving.

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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