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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 08, 2007 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and assigned an issuer credit rating (ICR) of "a-" to Kentucky Employers' Mutual Insurance (KEMI) (Lexington, KY). The outlook for the FSR has been revised to stable from negative, while the outlook assigned to the ICR is stable.
The ratings reflect KEMI's improving profitability, solid capitalization, favorable cash flow position and dominant market share of the Kentucky marketplace as a provider of workers' compensation coverage.
Offsetting these positive rating factors are the continuation of adverse reserve development on prior accident years and KEMI's limited spread of risk inherent to a mono-line workers' compensation writer, both regulatory and by line of business.
The rating outlook reflects the improvement in KEMI's earnings and management's planned moderation of premium growth, which have benefited overall capitalization that was somewhat offset by ongoing adverse reserve development.
These positive rating attributes reflect KEMI's strong underwriting and loss control knowledge in servicing a diversified clientele that mirrors the economic profile of Kentucky. The ratings acknowledge the risk selection process and application of loss control practices resulting in improved earnings while maintaining a sound business retention percentage. Despite the earnings drag of continued adverse reserve development on prior accident years, KEMI has reported improved profitability in recent years.
As both a competitive marketer and writer of last resort, KEMI maintains the ability to command sufficient rate structure, while retaining cancellation provisions subject to non-compliance of underwriting guidelines. Business is written with considerable focus on disciplined customer service and marketed through a combination of both in-house and field underwriters.
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 full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors.