Press Release - APRIL 27, 2012

A.M. Best Upgrades Ratings of Century-National Insurance Company


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

Gary Davis
Assistant Vice President
(908) 439-2200, ext. 5665
gary.davis@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 27, 2012
A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and issuer credit rating to “a” from “a-” of Century-National Insurance Company (CNIC) (North Hollywood, CA). The outlook for both ratings has been revised to stable from positive.

The rating actions reflect CNIC’s strong capitalization, sound operating performance and extensive knowledge of the local marketplace. Capitalization benefits from CNIC’s reserving practices that have resulted in consistently redundant calendar and accident year loss reserve development. Furthermore, the company’s underwriting leverage measures have improved in recent years due to solid surplus growth combined with the reduction in premiums written. CNIC’s favorable operating returns have been driven primarily by underwriting profits coupled with a robust stream of net investment income.

Partially offsetting these positive rating factors is CNIC’s concentration of risk in California that makes it susceptible to competitive, regulatory and legislative changes and to potential losses from severe catastrophic events, primarily earthquakes, which are somewhat mitigated by a comprehensive reinsurance program. Additionally, the company’s sizable common stock portfolio subjects its surplus to stock market volatility, which was evident in an earlier period. The stable outlook recognizes A.M. Best’s expectation that CNIC’s operating performance and risk-adjusted capitalization will continue to be strong over the near term.

CNIC’s ratings and/or outlook could be negatively impacted by unexpectedly large losses that would materially affect capitalization on a risk-adjusted basis.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Catastrophe Analysis in A.M. Best Ratings.” Best’s Credit Rating Methodology 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
003090 Century-National Insurance Company