AM Best has downgraded the Financial Strength Rating to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating to “bbb” (Good) from “a-” (Excellent) of Fenchurch General Insurance Company (Fenchurch) (Toronto, Canada). The outlook of these Credit Ratings (ratings) is stable.

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

The ratings for Fenchurch are being downgraded following the release of year-end 2025 results, which included significant reserve strengthening in the company’s legacy accident and sickness (A&S) line of business that has impacted the company’s balance sheet strength and enterprise risk management assessments. AM Best notes that the reserve strengthening was driven by a change in Fenchurch’s reserve methodology rather than adverse development. Nonetheless, in AM Best’s opinion, the materiality of the reserve strengthening highlights a weakness around reserving controls and oversight, as the previous reserve methodology used in the A&S segment was not reflective of the life-contingent nature of the business. Due to the strengthening of reserves, Fenchurch reported a larger net loss than anticipated, which has subsequently pressured capital levels and risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR). AM Best notes that Fenchurch is in the process of strengthening controls and governance processes and procedures that should benefit overall ERM going forward. Additionally, management has updated its strategic and capital plans. While management is in the process of implementing these updates, there remain execution risks.

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