Press Release - NOVEMBER 24, 2010

A.M. Best Revises Outlook to Positive for Loudoun Mutual Insurance Company

 Maurice Thomas
Senior Financial Analyst
(908) 439-2200, ext. 5794

Joseph Burtone
Assistant Vice President
(908) 439-2200, ext. 5125
Rachelle Morrow
Senior Manager, Public Relations
(908) 439-2200, ext. 5378

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644


A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of "a-" of Loudoun Mutual Insurance Company (Loudoun) (Waterford, VA).

The affirmation reflects Loudoun's sound risk-adjusted capitalization, consistently favorable operating performance and long-standing local market presence. The capital position is derived from the company's moderate underwriting leverage, management's conservative operating strategies and prudent catastrophe risk management. As a result, pre-tax operating gains have been reported for five consecutive years. Loudoun's consistency is reflective of management's commitment to managing operational risk through the use of good risk selection, sound pricing and underwriting discipline. These results are reflected in the company's five-year average combined and operating ratios, which compare favorably to the personal property industry composite. The positive outlook reflects A.M. Best's expectation that Loudoun will maintain conservative risk-adjusted capitalization and continue to produce solid operating results.

These positive rating factors are partially offset by Loudoun's geographic concentration of property risk in Virginia, which exposes it to weather-related events and competitive market conditions. Also, the company's investment leverage and expense ratio are elevated and compare unfavorably to the personal property industry composite. The underwriting expense ratio is partially mitigated by the sound quality of the underlying book of business as evidenced by the company's five-year average pure loss ratio, which significantly outperforms the industry composite. A.M. Best expects Loudoun to maintain consistent operating performance derived from its strict underwriting guidelines, conservative operating strategies and management's focus on continued process improvement.

The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies" and "Understanding BCAR for Property/Casualty Insurers." Methodologies can be found at

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.

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AMB# Company Name
000664 Loudoun Mutual Insurance Company