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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 08, 2011 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) of Louisiana Workers' Compensation Corporation (LWCC) (Baton Rouge, LA). The outlook for this rating is stable. Concurrently, A.M. Best has affirmed LWCC's issuer credit rating (ICR) of "a+" and revised the outlook to negative from stable.
The affirmation of the FSR with a stable outlook recognizes LWCC's strong level of capitalization and overall balance sheet liquidity, historically strong operating performance and established presence in its niche market providing workers' compensation coverage in Louisiana, serving a dual role as a competitive market participant and market of last resort. The ratings further acknowledge the company's experienced management team, conservative operating philosophy, leading market share position and sustainable competitive advantages as a not-for-profit mutual insurer.
The negative outlook on the ICR reflects LWCC's recent deterioration in operating performance driven by underwriting losses, stemming from isolated severity claims and ongoing competitive market conditions that have significantly reduced premium volume. The outlook further considers the challenges LWCC faces to improve underwriting results in the near term, given the challenging market conditions, attributable to weak macroeconomic conditions and ongoing competition in the Louisiana workers' compensation market.
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"; and "The Treatment of Terrorism Risk in the Rating Evaluation." 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.