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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 21, 2012 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of a of the subsidiaries of Safety Insurance Group, Inc.: Safety Insurance Company, Safety Indemnity Insurance Company and Safety Property and Casualty Insurance Company, collectively known as Safety Group (Safety). Concurrently, A.M. Best has affirmed the ICR of bbb of Safetys publicly traded holding company, Safety Insurance Group, Inc. (Delaware) [NASDAQ/GS: SAFT]. The outlook for all ratings is stable. All companies are domiciled in Boston, MA, except where specified.
The ratings of Safety reflect its solid risk-adjusted capitalization, historically strong operating income and its market position as a leading personal automobile writer in Massachusetts. The ratings also acknowledge the groups favorable loss reserve development and low investment leverage.
Partially offsetting these positive rating factors is Safetys concentration of business in Massachusetts, which primarily is in the private passenger automobile line. The groups recently increased homeowners writings have provided some product diversification; however, this does create greater property catastrophe risk, as is demonstrated by the groups unprofitable underwriting performance in 2011, which was significantly impacted by weather related events. Nevertheless, Safety does continue to maintain an effective reinsurance program to help mitigate the effects of severe weather related events.
Key drivers that could lead to positive rating actions in future periods would be Safety producing an operating performance in line with its historically strong results, while consistently outperforming the industry composite. Nonetheless, if frequent and severe weather events continue to impact Safetys geographical location, and/or other market disruptions cause underwriting loss with substantial negative impact on risk-adjusted capitalization, negative rating pressure may occur.
The methodology used in determining these ratings is Bests Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bests 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 Rating Members of Insurance Groups. Bests Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the worlds oldest and most authoritative insurance rating and information source.