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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - NOVEMBER 22, 2011 12:00 AM (EST)
A.M. Best Co. has upgraded the issuer credit rating to "a+" from "a" and affirmed the financial strength rating of A (Excellent) of Lawyers' Mutual Insurance Company (LMIC) (Burbank, CA). The outlook for both ratings is stable.
LMIC's ratings are reflective of its high level of capitalization, profitable operating performance and favorable loss reserve development. This has been enhanced by the company's adherence to high underwriting standards and conservative pricing and reserving practices. The ratings also acknowledge LMIC's ability to prudently respond to significant changes in competitive market conditions.
These positive rating factors are partially offset by the company's product and geographic concentration of risk increasing its susceptibility to adverse economic, regulatory or legislative conditions. The outlook is based on the company's strong financial position and sound operating fundamentals.
LMIC's positive rating factors are based on the company's commitment and focus on California attorneys, particularly small law firms and solo practitioners. The company has extensive knowledge of the California legal environment and offers value-added services to its policyholders, such as continuing professional education programs centered on loss prevention. These factors, as well as the company's payment of policyholder dividends, strongly contribute to the company's historically high policyholder retention rate.
While the rating outlook is stable, positive rating action for LMIC could result from a continuation of strong underwriting results, the consistent generation of surplus and maintenance of solid capitalization, as well as careful evaluation of enterprise risk management risks and opportunities with appropriate actions executed according to a detailed plan.
In the future, the ratings/outlook of the company could be lowered from sizeable negative investment outcomes and/or adverse underwriting results due to the loss of underwriting discipline as market conditions put pressure on the top line and policyholder retention.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies" and "Understanding BCAR for Property/Casualty Insurers." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.