Press Release - APRIL 18, 2011

A.M. Best Affirms Ratings of Nodak Mutual Group and Its Member


CONTACTS:
 
David Fidecaro
Senior Financial Analyst
(908) 439-2200, ext. 5420
david.fidecaro@ ambest.com

Rick Decker
Assistant Vice President
(908) 439-2200, ext. 5423
rick.decker@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. - APRIL 18, 2011
A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Nodak Mutual Group (Nodak) and its member, Nodak Mutual Insurance Company (Nodak Mutual). The outlook for both ratings is positive.

In addition, A.M. Best has assigned an FSR of A- (Excellent) and an ICR of "a-" to Battle Creek Mutual Insurance Company (Battle Creek) (Battle Creek, NE), following its March 4, 2011 affiliation and April 1, 2011 quota share reinsurance agreements with Nodak Mutual. The outlook assigned to both ratings is positive.

Concurrently, A.M Best has upgraded the ICR to "bbb+" from "bbb" and affirmed the FSR of B++ (Good) of Nodak Mutual's wholly owned, separately rated subsidiary, American West Insurance Company (American West). The outlook for these ratings is stable. All companies are domiciled in Fargo, ND, unless otherwise specified.

The ratings of Nodak reflect its solid capitalization, strong operating results and business profile as one of the leading writers of property/casualty insurance in North Dakota. The outlook reflects A.M. Best's expectation for the group to sustain its risk-adjusted capitalization and operating performance as it continues expansion into new operating territories, as well as for the successful integration of recently affiliated Battle Creek.

These positive rating factors are derived from Nodak's solid capitalization resulting from consecutive years of pre-tax operating gains, which were driven by positive underwriting income supplemented by solid investment income. Loss reserve development was favorable, as evidenced by consistent redundancies over the past five calendar and accident years. Nodak maintains a strong market presence, a cost-effective distribution network and has extensive local market knowledge.

Somewhat offsetting these positive rating factors are Nodak's concentration of business in North Dakota, which exposes it to the potential for frequent and severe weather-related events as well as judicial and regulatory actions. Despite this concentration, Nodak reported several years of consecutive underwriting income, even in years when weather losses were significant. The group's business concentration is somewhat mitigated through ceded reinsurance treaties.

The ratings of American West recognize its moderate underwriting leverage, profitable operating performance and the support provided by Nodak Mutual.

Partially offsetting these positive rating factors are the company's limited offerings of crop hail and multiperil crop coverages and its geographic concentration in South Dakota and Minnesota, which exposes it to frequent and severe weather-related events as well as judicial and regulatory actions.

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:"Understanding BCAR for Property/Casualty Insurers"; "Natural Catastrophe Stress Testing Methodology"; "Catastrophe Analysis in A.M. Best Ratings"; "Risk Management and the Rating Process for Insurance Companies"; "Catastrophe Risk Management Incorporated Within the Rating Analysis"; and "Rating Members of Insurance Groups." 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.

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