AM Best has upgraded the Financial Strength Rating to A- (Excellent) from B++ (Good) and the Long-Term Issuer Credit Rating to “a-” (Excellent) from “bbb+” (Good) of First Net Insurance Company (First Net) (Guam). The outlook of these Credit Ratings (ratings) has been revised to stable from positive.

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

The rating upgrades reflect First Net’s strong operating performance, which compares favorably with the private passenger standard auto (PPSA) composite average, and is supported by a steady stream of net income that has been reported in each of the last 10 years. Underwriting income was reported in four of the last five years, except for 2023, when the company was impacted by Typhoon Mawar, which was the most severe weather event in Guam since 2002. Despite this event, First Net reported operating income, and the company’s five-year combined ratio continues to compare favorably with the PPSA composite by almost 20 percentage points. Additionally, First Net’s pretax return on revenue and pretax return on equity five-year averages significantly outperform PPSA composite averages.

The very strong balance sheet assessment is supported by the strongest level of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), which is expected to remain consistent in future periods. The limited business profile assessment reflects the narrow scope of operations concentrated in Guam with modest exposure on Saipan and other islands throughout Micronesia. AM Best assesses First Net’s ERM program as appropriate, which includes a comprehensive reinsurance program that mitigates the impact of severe weather events, as demonstrated with Typhoon Mawar in 2023.

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.

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