Press Release - MAY 04, 2009

A.M. Best Revises Outlook to Positive for The Harford Mutual Insurance Companies and Its Members


CONTACTS:
 
Analyst(s)
W. Dolson Smith, CFA
(908) 439-2200, ext. 5379
w.dolson.smith@ambest.com

Michael J . Lagomarsino, CFA
(908) 439-2200, ext. 5810
michael.lagomarsino@ambest.com

Public Relations
Jim Peavy
(908) 439-2200, ext. 5644
james.peavy@ambest.com

Rachelle Morrow
(908) 439-2200, ext. 5378
rachelle.morrow@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK, N.J. - MAY 04, 2009
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of The Harford Mutual Insurance Companies (Harford) and its two property/casualty pool members, The Harford Mutual Insurance Company and Firstline National Insurance Company. Both companies are domiciled in Bel Air, MD.

The ratings reflect Harford's excellent risk-adjusted capitalization, conservative underwriting leverage and strong liquidity. The ratings also reflect management's greater focus and discipline in terms of underwriting, price monitoring, risk aggregation, reserving methodology, internal controls and technology to better service its agents and customers, which combined with improved loss experience, the reporting of favorable loss reserve development on recent accident years and the absence of major weather-related losses, have contributed to substantially improved underwriting and overall operating performance.

Offsetting these positive factors are Harford's higher expense ratio relative to its peers, elevated common stock leverage, which exposes Harford's net income and surplus to the vagaries of the equity market as evidenced in recent quarters, exposure to weather-related losses due to its Mid-Atlantic concentration and the near-term challenges associated with a highly competitive property/casualty environment.

The positive outlook recognizes management's substantial operating improvements over the past several years and the future benefits to be gained from these improvements in terms of competitive advantages, operating performance and internal capital generation.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.

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