CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 08, 2002 12:00 AM (EST)
A.M. Best Co. has raised the financial strength rating from A- (Excellent) to A (Excellent) for Preferred Mutual Insurance Company, New Berlin, New York.
The rating reflects Preferred Mutual's excellent capitalization, favorable earnings and well-established regional market presence. These positive attributes are derived from the company's conservative underwriting leverage, historically favorable loss reserve development, underwriting discipline, infrastructure enhancements through technology investments and recent rate increases. A.M. Best believes that Preferred Mutual's focused business strategy, catastrophe mitigation initiatives, expense reduction efforts, marketing capabilities and technology platform should provide it with sustainable earnings over the long-term.
Partially offsetting these positive rating factors are the company's geographic concentration of risk with subsequent exposure to frequent and severe weather-related events, an expense disadvantage and exposure to equity market fluctuations. Preferred Mutual's geographic spread is limited with approximately two-thirds of direct written premium derived from New York. Consequently, the company's results are exposed to competitive market conditions, weather-related losses and regulatory and legislative risks. Despite a modest reduction to surplus during 2001 - brought about by significant unrealized losses on the common stock portfolio - the company continues to maintain a favorable capital position. Accordingly, A.M. Best views the company's rating outlook as stable.
A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.