CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 31, 2007 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of American Modern Insurance Group (American Modern) and its property/casualty members. Concurrently, A.M. Best has affirmed the ICR of "a-" and debt ratings of "a-" on senior debt, "bbb+" on subordinated debt and "bbb" on preferred stock of the $150 million shelf registration filed by American Modern's ultimate parent, The Midland Company (Midland) (Amelia, OH) [NASDAQ: MLAN]. The outlook for all ratings is stable. (See below for a detailed list of the ratings.)
The ratings of American Modern reflect its superior capitalization, consistent investment income and solid underwriting performance as a niche provider of insurance products for the residential property, recreational vehicles and financial services markets. The specialty focus provides a significant competitive advantage for the group, particularly in terms of pricing, claims adjusting and the group's ability to sustain premium growth in a competitive environment. American Modern's strong underwriting performance and consistent investment income have resulted in pre-tax operating gains of approximately $285 million over the last five years. The ratings also acknowledge the modest financial leverage of Midland.
Partially offsetting these positive rating factors are the above average expense levels in relation to the property lines industry composite and elevated premium leverage. In addition, as over half of American Modern's business is residential property, its performance is susceptible to catastrophe events. However, American Modern continues to strengthen its reinsurance programs, modify underwriting criteria and more selectively spread its geographical risks in catastrophe-prone areas to mitigate potential effects of future catastrophic events.
The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for the American Modern Insurance Group and its following property/casualty members:
- American Modern Home Insurance Company
- American Family Home Insurance Company
- American Southern Home Insurance Company
- American Western Home Insurance Company
- American Modern Select Insurance Company
- American Modern Lloyds Insurance Company
- American Modern Insurance Company of Florida Incorporated
- American Modern Surplus Lines Insurance Company
The ICR of "a-" has been affirmed for The Midland Company.
The following debt ratings have been affirmed under the $150 million shelf registration:
The Midland Company—
-"a-" on senior unsecured debt
-"bbb+" on subordinated debt
-"bbb" on preferred stock
Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.