CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 13, 2009 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and issuer credit rating (ICR) to "a" from "a-" of MEEMIC Insurance Company (MEEMIC) (Auburn Hills, MI). The ratings have been removed from under review with positive implications and assigned a stable outlook.
These rating actions are based upon the completion of MEEMIC's acquisition by the Auto Club Insurance Association (Dearborn, MI), the lead member of The Auto Club Group (ACG), from Motors Insurance Corporation (Southfield, MI), the lead member of GMAC Insurance Group (GMACI).
MEEMIC's ratings reflect its inclusion into ACG's property/casualty pool.
Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of "a" of ACG and its four property/casualty member companies: Auto Club Insurance Association, MemberSelect Insurance Company, Auto Club Property-Casualty Insurance Company (ACPCIC) (Bettendorf, IA) and Auto Club Group Insurance Company. The outlook for these ratings is stable, and the companies are all domiciled in Dearborn MI, unless otherwise specified.
The affirmation of ACG's ratings recognize its historically favorable operating performance, adequate capitalization and well-established position as a personal lines market leader in Michigan, as well as the benefits derived from offering insurance products to AAA members.
Somewhat dampening these strengths are the group's concentration of business in Michigan, which subjects it to unfavorable changes in the regulatory, legal and highly competitive market environment. Additionally, the recent downturn in underwriting performance suffered over the last four years as the group has invested heavily in product, distribution and systems. During this same period, competition increased in ACG's markets accompanied by a marked increase in storm frequency and severity. ACG suffered over $90 million in realized losses in 2008 as a result of the recent market turmoil, and the associated provision for securities accounted for as other than temporarily impaired (OTTI). These circumstances have reduced ACG's capital flexibility and has challenged the group to improve its underwriting performance to strengthen its capital generation efforts in the near to mid term.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.