Press Release - NOVEMBER 23, 2011

A.M. Best Revises Outlook to Positive for Western Mutual Insurance Pool and Its Members


CONTACTS:
 Michael T. Venezia
Senior Financial Analyst
(908) 439-2200, ext. 5034
michael.venezia@ambest.com

Jeffrey Mango, CPA
Assistant Vice President
(908) 439-2200, ext. 5204
jeffrey.mango@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 23, 2011
A.M. Best Co. has revised the outlook to positive from stable and affirmed the financial strength rating of A (Excellent) and issuer credit ratings of "a+" of Western Mutual Insurance Pool (Western Mutual) and its member companies, Western Mutual Insurance Company, Residence Mutual Insurance Company and Arizona Home Insurance Company (Phoenix, AZ). All companies are domiciled in Irvine, CA, unless otherwise specified.

The rating actions are due to Western Mutual's continued favorable underwriting performance, strong risk-adjusted capitalization and declining underwriting leverage trend in recent years. The ratings also recognize the fact that the group is able to employ multiple distribution channels to market its products. Besides brokers and independent agents, Western Mutual also is able to leverage its strong products and marketing efforts, to facilitate steady growth of its direct business of homeowners' insurance.

These positive rating factors are somewhat offset by Western Mutual's concentration of business in California, which exposes earnings and surplus to volatility from changes in that state's regulatory and judicial climate, competitive and economic conditions, as well as catastrophe risks.

Future positive rating actions may result from Western Mutual's continuing to produce strong underwriting results, along with its strengthened risk-adjusted capitalization. However, negative rating actions could result if underwriting performance falls markedly short of A.M. Best's expectations.

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"; "Catastrophe Analysis in A.M. Best Ratings"; "Rating Members of Insurance Groups"; and "Risk Management and the Rating Process for Insurance Companies." 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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