Press Release - NOVEMBER 22, 2011

A.M. Best Upgrades Issuer Credit Rating of Erie and Niagara Insurance Association


CONTACTS:
 Marc Liebowitz
Senior Financial Analyst
(908) 439-2200, ext. 5071
marc.liebowitz@ambest.com

Gerard Altonji
Assistant Vice President
(908) 439-2200, ext. 5626
gerard.altonj@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 22, 2011
A.M. Best Co. has upgraded the issuer credit rating to "a+" from "a" and affirmed the financial strength rating of A (Excellent) of Erie and Niagara Insurance Association (Erie and Niagara) (Williamsville, NY). The outlook for both ratings is stable.

The rating actions reflect Erie and Niagara's very strong risk-adjusted capitalization, sustained operating profitability throughout various market cycles, conservative leverage measures and favorable balance sheet liquidity. These positive rating factors are the result of Erie and Niagara's modest underwriting leverage and strong underwriting results, which reflect the company's extensive knowledge of its market. Despite current soft market conditions and elevated commission expense ratios, Erie and Niagara's underwriting results have remained profitable since 2003. The outlook is reflective of its strong risk-adjusted capitalization and A.M. Best's expectation that Erie and Niagara will continue to generate profitable underwriting and operating results.

Somewhat offsetting these positive rating factors are Erie and Niagara's adverse loss reserve development reported over the past 10 years and its underwriting and regulatory risks associated with being a mono-state insurer. The company has settled the majority of claims that generated adverse loss development over the past ten years, which should help lessen the potential for future adverse development. Despite heighten storm activity throughout the Northeast, the company is expected to report underwriting earnings in 2011.

Erie and Niagara is an assessment co-operative property/casualty insurer that does not write business in the five boroughs of New York City or Long Island. The company underwrites business in both personal and commercial lines of insurance, including commercial multiple peril, homeowners, fire, farmowners, landlord packages, manufactured home and inland marine.

A.M. Best believes Erie and Niagara is well positioned at its current rating level in the near to medium term. Factors that may lead to negative rating actions include a material deterioration of risk-adjusted capital, diminishing trends in its operating performance or (given its single state operating territory) future regulatory changes that have a measurable impact on operating results.

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" and "Understanding BCAR for Property/Casualty Insurers." 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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AMB# Company Name
010591 Erie and Niagara Insurance Association