AM Best has revised the outlook to positive from stable for Federated Underwriting Company, the single-parent captive of State Street Corporation, while affirming its Financial Strength Rating of ‘A-’ (Excellent) and its Long-Term Issuer Credit Rating of ‘a-’ (Excellent). Based in Colchester, Vermont, Federated was established and capitalised in 2019 as part of State Street’s alternative risk financing strategy, following significant price firming in the insurance market. The captive’s sole purpose is to write specific risks related to the insurance programmes of its parent. The rating agency assesses Federated’s balance sheet strength as very strong, supported by its adequate operating performance, limited business profile and appropriate enterprise risk management. The positive outlook reflects AM Best's expectation that the captive will continue its solid operating performance, remain within its business plan and stay closely aligned with its parent, for which it also receives rating enhancement. The ratings also include a level of credit enhancement from State Street, one of the world’s largest financial service organisations. AM Best believes that given the captive nature of the business being insured, the interests of State Street and Federated are aligned directly, and additional capital and financial flexibility are available if necessary.
