2023 has been one of the most successful years in FM Global’s history, so it is important that any review begins with a huge thank you to our clients, partners, colleagues and shared communities. We could not succeed in protecting our clients’ purpose without your partnership. Thank you.
In 2023, world events again highlighted the importance of resilience in protecting the value our clients generate for their stakeholders.
We saw the increasing impact of climate change on our communities, with floods, wildfires and wind events affecting all corners of the globe. We saw humanitarian crises spilling into vulnerable communities. Supply chains continued to experience stress and disruption. And we felt the effects of inflation on the insurance industry and beyond.
At the same time, your collective response to these challenges—to persevere and even thrive—never ceases to amaze us. We are proud to partner with you. Our work together continues to be incredibly important in infusing a sense of stability in an increasingly uncertain world.
Strong financials
Despite the challenging environment, we had another phenomenal year in 2023, ending with US$22.5 billion in surplus.
Our combined ratio was 67.4%, which includes our policyholder membership credit and resilience credit. Pretax income from insurance operations was US$2.1 billion. With these results, combined with a favorable investment market in 2023, we continued our strong surplus position.
Sharing our success
As a mutual company, we share our success with our clients. One way we do this is through credits, which are applied to offset premiums for eligible policyholders.
Indeed, our 2023 membership credit ranks among our proudest achievements for the year. In April we announced our largest-ever membership credit of US$823 million on the back of outstanding financial results. With our 2023 membership credit, FM Global has now returned more than US$5.2 billion in credits since 2001.
Similarly, we followed up our first-of-its-kind US$294 million resilience credit in 2022 with a US$357 million resilience credit in 2023, providing clients with additional resources to guard against extreme weather hazards such as wind, flood and wildfire.
Since the inception of the resilience credit, loss expectancy improvement for climate risks increased to more than US$12 billion in 2022 and more than US$20 billion in 2023. Between our membership and resilience credits, we returned more than US$1 billion to eligible policyholders in 2023.
Climate resilience: Raising the bar
Building on the 2022 launch of our suite of climate resilience products, in 2023 we launched our Climate Change Impact Report, a proprietary tool to help clients identify, understand and avoid risks as far into the future as 2050.
The report combines client-specific engineering data—gained on location—with the latest climate science and modeling, allowing FM Global to provide clients with actionable insights to stay resilient in the near and distant future, prioritize risk improvement investments and allow them to continue serving their customers, partners and communities. The report identifies client-specific locations with the largest potential climate change impact due to risk from extreme rain, strong winds, heat waves, droughts and rising sea levels.
Expanding our global footprint
In 2023 we continued our efforts to bring FM Global’s unique, science-based solutions to more markets and clients. Last year we celebrated the establishment of an insurance branch in Korea, bringing our approach to loss prevention to the country's commercial property, manufacturing and infrastructure owners.
With this new license, we continued the expansion of FM Global’s global network into one of Asia’s most important growth markets. The license builds on 25 years of experience in Korea, where we continue to support global clients’ assets working alongside Korean insurance partners.
Strong industry ratings
We are also extremely proud that ratings agencies affirmed our strong financial strength once again in 2023.
Fitch Ratings affirmed FM Global as AA (very strong) and its rating outlook as stable, reflecting the “long-term underwriting profitability, very strong capitalization and competitive advantages derived from the company’s engineering expertise and global presence in specialty commercial property insurance markets, as well as benefits drawn from the company's mutual company status.”
AM Best also provided a strong assessment, affirming FM Global's Financial Strength Rating of A+ (Superior) and Long-Term Issuer Credit Ratings of “aa” (Superior) with a stable outlook. “The ratings reflect FM Global’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management,” according to AM Best.
S&P Global Ratings made an upward revision of FM Global’s outlook from stable to positive, affirming an A+ financial strength rating.
Building on today’s success for a better tomorrow
Protecting today for a better tomorrow. Every day we wake up to deliver on our purpose. It’s a mission we’ve been committed to for nearly 200 years. Our incredible success in 2023 positions us strongly to support our clients in the face of the challenges 2024 may bring. Through continued investments in science, technology, our people and our mutual partnership, we will continue to bring the exciting developments that offer enduring stability for tomorrow. Thank you again for an amazing year. We could not have reached these achievements without you.