Fitch has affirmed the Insurer Financial Strength ratings of FM Mutual and its affiliates at AA, which is defined as very strong, and the rating outlook is stable.

The credit ratings agency made the latest assessment after carrying out a “stress test” to gauge how the insurer would hold up under a range of economic scenarios during this coronavirus pandemic.

While the insurer’s policies have generally included coverage for communicable disease-related business interruption claims up to policy specific sub-limits, Fitch expects the impact of COVID-19 claims will “remain in line with rating sensitivities.”

The affirmation “reflects FM Global’s long-term underwriting profitability, very strong capitalisation and competitive advantages derived from the company's engineering expertise and global presence in specialty commercial property insurance markets”.

“Partially offsetting these positives is the effect of year-to-year capital volatility derived from the company's underwriting activities and long-held common equity investment allocation.”

Last year the mutual reported a record statutory surplus of $US13.7 billion ($21.4 billion), the result of strong underwriting results and substantial investment gains during the period.