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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 31, 2011 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a" of Eastern Alliance Insurance Group (EAIG) and its members. EAIG consists of Eastern Alliance Insurance Company (EAIC), Allied Eastern Indemnity Company (AEIC), Eastern Advantage Assurance Company (EAAC) and Employers Security Insurance Company (ESIC) (Indianapolis, IN), which operate under an intercompany pooling agreement. Concurrently, A.M. Best has affirmed the ICR of "bbb" of the holding company, Eastern Insurance Holdings, Inc. (EIHI) [NASDAQ: EIHI]. The outlook for all ratings is stable. All companies are domiciled in Lancaster, PA, unless otherwise specified.
The ratings recognize EAIG's strong operating results, excellent capitalization, prudent reserving practices and the financial flexibility afforded by EIHI. The cultivation of a loyal agency base within preferred territories has produced profitable growth as evidenced by the group's five-year average combined ratio, which outperforms the workers' compensation composite by a wide margin. The strong underwriting performance reflects management's commitment to maintain sound pricing, a proactive return to work program and utilization of "compromise and release" agreements. This approach has allowed EAIG to close claims more quickly and at a lower average cost than the typical workers' compensation writer.
Partially offsetting these positive rating factors is EAIG's product concentration as a monoline workers' compensation writer, which potentially exposes it to increased risk of regulatory or legislative changes, as well as the execution risk associated with continued expansion initiatives.
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"; "Rating Members of Insurance Groups"; 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.