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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - NOVEMBER 30, 2012 12:00 AM (EST)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A- (Excellent) and issuer credit rating of a- of Affinity Mutual Insurance Company (AMIC) (Lima, OH).
The negative outlook reflects the deterioration in AMICs underwriting results during 2011 and through the first three quarters of 2012. The deterioration in underwriting results was primarily driven by increases in incurred losses from weather-related events coupled with AMICs historically elevated underwriting expense level and the cumulative impact of persistent soft market conditions on the companys business.
The affirmation of the ratings reflects AMICs solid level of risk-adjusted capitalization, modest underwriting leverage and strong balance sheet liquidity. These positive rating attributes are offset by AMICs elevated level of common stock leverage, which results in a heightened exposure to equity market volatility and the aforementioned factors that led to the negative outlook.
The methodology used in determining these ratings is Bests Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bests 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 and Understanding BCAR for Property/Casualty Insurers. Bests Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the worlds oldest and most authoritative insurance rating and information source.