CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - OCTOBER 19, 2012 12:00 AM (EDT)
A.M. Best Co. has placed under review with negative implications the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of the subsidiaries of Meadowbrook Insurance Group, Inc. (MIGI) (Southfield, MI) [NYSE: MIG], which operate under an intercompany reinsurance pooling agreement. A.M. Best also has placed under review with negative implications the ICR of “bbb-” of MIGI. (See below for a detailed listing of the companies and ratings.)
The under review status reflects MIGI’s preliminary announcement that its third quarter 2012 results will be adversely impacted by an increase in its net ultimate loss estimates for 2011 and prior accident years. The negative implications reflect the reasonable likelihood that the ratings will be downgraded based on this announcement, worse than expected operating results in 2012, the reduction in risk-adjusted capitalization levels and earnings prospects going forward.
The ratings will remain under review pending further discussions between A.M. Best and MIGI’s management regarding various capital raising initiatives that are being explored, as well as an in depth view surrounding the degree and nature of the charges taken, any other action plans implemented by management and MIGI’s ability to stem another instance of adverse reserve development, if it should arise.
The FSR of A- (Excellent) and ICRs of “a-” have been placed under review with negative implications for the following subsidiaries of Meadowbrook Insurance Group, Inc.:
- Star Insurance Company
- Century Surety Company
- Savers Property and Casualty Insurance Company
- ProCentury Insurance Company
- Williamsburg National Insurance Company
- Ameritrust Insurance Corporation
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. 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.