AM Best has assigned a Financial Strength Rating of A- (Excellent) and a Long-Term Issuer Credit Rating of “a-” to Federated Underwriting Company (Federated) (Colchester, VT). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect Federated’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, limited business profile, appropriate enterprise risk management and one notch of credit enhancement that it receives from its ultimate parent, State Street Corporation (State Street) [NYSE: SST].

This single parent captive was formed and capitalized in 2019 as part of State Street’s alternative risk financing strategy in the wake of significant price firming in the professional liability insurance market. Federated’s business profile is considered limited as it will operate as a single parent captive insurer whose sole purpose is to take on a specific layer of risk related its parent’s professional liability and bankers blanket bond insurance tower. AM Best views the company’s prospective operating performance considerations as “adequate” as this includes elements of stochastic modeling, average annual loss expectancies and tail risk probabilities. These projections, however, are subject to a high degree of variability due to external market factors.

Lastly, the rating includes a level of credit enhancement from State Street., one of the world’s largest financial service organizations. This rating enhancement considers an implied level of financial support to be provided if and when necessary as part of its legal obligation contained in its client agreements.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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 New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Kourtnie Beckwith Financial Analyst +1 908 439 2200, ext. 5124 kourtnie.beckwith@ambest.com Daniel J. Ryan Senior Director +1 908 439 2200, ext. 5325 daniel.ryan@ambest.com Christopher Sharkey Manager, Public Relations +1 908 439 2200, ext. 5159 christopher.sharkey@ambest.com Jim Peavy Director, Public Relations +1 908 439 2200, ext. 5644 james.peavy@ambest.com

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