AM Best


A.M. Best Assigns Ratings to AmFed National Insurance Company and AmFed Casualty Insurance Company


CONTACTS:


Michael Russo
Senior Financial Analyst
(908) 439-2200, ext. 5372
michael.russo@ambest.com

Michael Lagomarsino, CFA
Assistant Vice President
(908) 439-2200, ext. 5810
michael.lagomarsino@ambest.com


Christopher Sharkey
Manager, Public Relations
(908) 439-2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - AUGUST 28, 2014 03:53 PM (EDT)
A.M. Best has assigned a financial strength rating of B++ (Good) and the issuer credit ratings of "bbb+" to AmFed National Insurance Company and its 100% reinsured subsidiary, AmFed Casualty Insurance Company, collectively referred to as AmFed Insurance Group (AmFed) (both domiciled in Ridgeland, MS). The outlook assigned to these ratings is stable.

The ratings and outlook reflect AmFed's sound business plan, solid risk-adjusted capitalization and in-depth knowledge of Mississippi's workers' compensation market. Offsetting these positive rating factors are the company's narrow product focus and inherent risk as a new group attempting to gain market share and expand its geographic presence.

AmFed maintains solid risk-adjusted capitalization due to its relatively conservative underwriting and investment leverage measures. In addition, the group benefits from senior management's successful track record in Mississippi's workers' compensation market, as well as the historically positive experience working with the Mississippi Workers' Compensation Assigned Risk Pool since its inception. AmFed's management maintains a long history, working as a third-party administrator and consultant, with the Builders and Contractors Associations of Mississippi Self Insurer's Trust (BCAM), whose self-insurance trust liabilities were transferred to AmFed, effective July 1, 2014. Going forward, AmFed will underwrite the former BCAM's self-insured participants on a fully insured basis, which according to management's projections, will make up the majority of AmFed's business over the intermediate term. AmFed's long-term relationship with BCAM and BCAM's general history of solid performance alleviates the execution risk associated with the transaction.

While A.M. Best believes AmFed's ratings and outlook are well positioned at current levels, factors that may lead to positive rating actions include a trend of positive operating and underwriting profitability that outperforms A.M. Best's peer composite, while enhancing capitalization through organic surplus growth. Factors that could lead to negative rating actions include a material deviation from management's projections, a lack of underwriting discipline that deteriorates its underwriting and operating performance to a level below its peers or an erosion of surplus that causes a significant decline in risk-adjusted capital.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.


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