AM Best has revised the Financial Strength Rating (FSR) outlook to negative from stable and the Long-Term Issuer Credit Rating (Long-Term ICR) outlook to negative from positive and affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) for Florida Lawyers Mutual Insurance Company (FLMIC) (Oviedo, FL).

These Credit Ratings (ratings) reflect FLMIC’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management (ERM).

The change in outlooks to negative resulted from the company reporting year-end 2024 operating losses of $872,000, driven by an underwriting loss of $4.0 million. FLMIC reported a combined ratio of 133.1 for 2024, materially beyond its earlier year-end combined ratio projection of 89.5. Historically, the company recorded loss and loss-adjusted expense reserve redundancies in the fourth quarter that led to solid results; however, due to an uptick in claims frequency and severity, the reserve redundancies did not materialize.

Additionally, through Sept. 30, 2025, the company reported increased operating losses of $3.6 million, generated from increased underwriting losses of $5.9 million with a combined ratio of 155.1. The company is projecting a combined ratio of 136.8 at Dec. 31, 2025, materially worse than its five-year historical underwriting average combined ratio that compares unfavorably to its legal professional liability peers. The company notes that the increased volatility is due to changing market dynamics, with several areas of practice claims having increased in both frequency and severity over the past two years. Accordingly, the company’s business profile is under pressure and may change from neutral to limited given its geographic and product concentration in Florida. The change in the outlooks reflects increased frequency of personnel turnover at the chief financial officer/controller position over the past two years, which has increased operational risk for the entire company and its overall ERM capability.

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