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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JANUARY 09, 2013 12:00 AM (EST)
A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from B (Fair) and the issuer credit rating to “a+” from “bb+” of Austin Mutual Insurance Company (Austin) (Maple Grove, MN). The outlook for both ratings has been revised to stable from positive.
The upgrades are due to the increase in Austin’s intercompany quota share reinsurance agreement from 35% to 100% as of January 1, 2013, with the lead company of Main Street America Group, NGM Insurance Company, having become a fully reinsured member.
A.M. Best does not expect to downgrade (or place a negative outlook on) the ratings of Austin in the near to mid-term. However, such actions would ensue if the company’s relationship with the Main Street America Group, (most specifically its intercompany reinsurance arrangements) were to incur material changes or have a severe reduction in Austin’s capitalization due to an increased credit leverage of its reinsured book of business in the event of a catastrophe.
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”; “Rating Members of Insurance Groups”; and “Understanding BCAR for Property/Casualty Insurers.” 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.