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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JUNE 23, 2008 12:00 AM (EDT)
A.M. Best Co. has downgraded the financial strength rating (FSR) to A (Excellent) from A+ (Superior) and issuer credit ratings (ICR) to "a" from "aa-" of Cumberland Insurance Group (Cumberland Group) and its member, The Cumberland Mutual Fire Insurance Company. The outlook has been revised to stable from negative.
Concurrently, A.M. Best has downgraded the FSR to A- (Excellent) from A (Excellent) and ICR to "a-" from "a" of Cumberland Insurance Company, Inc. (CIC). The outlook for these ratings is negative. All companies are domiciled in Bridgeton, NJ.
The rating downgrades of Cumberland Group primarily reflect its unfavorable underwriting and operating profitability over the past five years, in addition to several years of adverse loss reserve development. The group continues to maintain strong risk-adjusted capitalization, which is derived from moderate underwriting leverage, conservative investment risk, strong balance sheet liquidity and a long standing market presence as a leading property writer in New Jersey.
CIC's rating downgrades reflect a decline in its risk-adjusted capitalization following several years of unfavorable underwriting and operating performance, recently increased underwriting risk and adverse loss development trends. CIC's adequate capitalization is derived from its modest investment leverage and local market knowledge.
CIC's weak underwriting performance was driven by competitive market conditions and its geographic and product concentration, as it predominantly writes commercial casualty business in New Jersey. The outlook reflects the potential for ongoing, unfavorable operating performance and/or declines in risk-adjusted capitalization.
For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.
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. For more information, visit www.ambest.com.