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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MARCH 02, 2010 12:00 AM (EST)
A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and issuer credit rating to "a-" from "a" of Minnesota Lawyers Mutual Insurance Company (Minnesota Lawyers) (Minneapolis, MN). The outlook for both ratings has been revised to stable from negative.
The rating downgrades follow the negative outlook that was placed on Minnesota Lawyers' ratings last year as a result of the company's deteriorating operating performance and significant drop in its policyholder surplus levels. At that time, A.M. Best expected operating results would materially improve over the near term. While surplus levels recovered appreciably in 2009, underwriting and operating performance continued to fall short of A.M. Best's expectations. As a result, the company's overall operating performance over the last few years is no longer consistent with the previous rating level.
The deterioration in underwriting performance, which began in the latter part of 2007, was initially attributable to higher frequency levels brought on by deteriorating economic conditions. It has since been further aggravated by higher claim severities and the emergence of adverse prior year loss reserve development. Furthermore, Minnesota Lawyers' results have been adversely impacted by inadequate pricing on some of its business written during a past period of significant exposure growth.
Nevertheless, Minnesota Lawyers' current ratings reflect its strong risk-adjusted capital position, high policyholder retention levels and management's extensive knowledge of the legal profession. The stable outlook recognizes this strong capital position and the expected benefit that recently implemented underwriting initiatives should have on the company's operating performance over the near term. These initiatives include base rate increases and real estate surcharges. Minnesota Lawyers also has exited numerous geographical locales where operating performance did not meet its standards.
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.