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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 08, 2011 12:00 AM (EST)
A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and issuer credit rating to "a-" from "bbb+" of Central Co-Operative Insurance Company (Central Co-Operative) (Baldwinsville, NY). The outlook for both ratings has been revised to stable from positive.
The rating upgrades reflect Central Co-Operative's favorable risk-adjusted capitalization, driven by modest underwriting leverage and consecutive years of positive underwriting results which, combined with steady investment income, generated consistently strong pre-tax operating income. The company also benefits from a long-standing local market presence in its operating territory.
Partially offsetting these positive rating factors is Central Co-Operative's elevated expense position, driven primarily by commission expenses, and more recently, by increased New York State assessments. Also, as a single state property writer with a geographic concentration in north central New York, the company's earnings are susceptible to frequent and severe weather-related losses. However, management maintains a comprehensive reinsurance program in order to mitigate the impact of catastrophic events on the company's surplus.
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"; "Catastrophe Risk Management Incorporated Within The Rating Analysis"; "Catastrophe Analysis in A.M. Best Ratings"; and "Natural Catastrophe Stress Test Methodology." 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.