AM Best


A.M. Best Affirms Ratings of Fremont Insurance Company and Fremont Michigan InsuraCorp, Inc.


CONTACTS:

Kenneth Tappen

Senior Financial Analyst

(908) 439-2200, ext. 5248

kenneth.tappen@ambest.com

Joseph Burtone

Assistant Vice President

(908) 439-2200, ext. 5125

joseph.burtone@ambest.com

Rachelle Morrow

Senior Manager, Public Relations

(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com

Jim Peavy

Assistant Vice President, Public Relations

(908) 439-2200, ext. 5644

james.peavy@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK, N.J. - NOVEMBER 19, 2010 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating (ICR) of "a-" of Fremont Insurance Company (Fremont). A.M. Best also has affirmed the ICR of "bbb-" of its parent holding company, Fremont Michigan InsuraCorp, Inc. [OTC BB: FMMH]. The outlook for all ratings is stable. Both companies are domiciled in Fremont, MI.

The ratings and outlook reflect Fremont's solid risk-adjusted capitalization, favorable operating earnings and its well-established presence as a writer of personal lines insurance in Michigan. The company's capital position reflects its moderate underwriting leverage, conservative investment risk profile and favorable loss reserve development. Fremont's operating earnings have been driven by strong underwriting results and solid investment income over the previous five-year period. The favorable operating earnings were due in part to management initiatives such as terminating unprofitable agencies, increased insurance-to-value, rate adjustments, enforcing stricter underwriting guidelines, insurance scoring and diversifying its spread of risk within Michigan.

These positive rating factors are partially offset by the risks inherent in Fremont's geographic concentration within Michigan, which may subject it to weather-related loss exposure, potentially adverse legal and regulatory conditions, as well as economic and competitive market pressures. Most recently, Fremont's pre-tax operating earnings have declined due to a deterioration in underwriting results that was driven by a higher loss and loss adjustment expense ratio across all lines of business, coupled with lower net investment income. The deterioration in loss experience was attributable to an increase in weather-related claims, higher losses in personal automobile and increased fire losses.

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"; "Understanding BCAR for Property/Casualty Insurers"; "Natural Catastrophe Stress Test Methodology"; and "Catastrophe Risk Management Incorporated Within the Rating Analysis." Methodologies can be found at www.ambest.com/ratings/methodology.

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


Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.