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FOR IMMEDIATE RELEASE
OLDWICK, N.J. - MAY 02, 2008 12:00 AM (EDT)
A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" to Eastern Atlantic Insurance Company (EAIC) (Harrisburg, PA). The outlook for both ratings is stable.
The rating reflects EAIC's solid risk-adjusted capitalization, improved operating results, strong management team with expertise in this niche market and the additional financial and operating benefits derived from the other insurance and construction companies controlled by the president, George A. Parmer.
Partially offsetting these positive rating factors is the company's fluctuating underwriting income over a five-year period. Another offsetting rating factor is EAIC's business concentration in several relatively homogeneous businesses, which exposes it to potential adverse effects from less than perfect diversification of its business profile. This is mitigated, in part, as EAIC remains focused on stringent underwriting standards and the support demonstrated by the parent as evidenced by capital contributions in 2001.
During 1996-2002, operating earnings were dampened somewhat by business assumed from a commercial auto program written through an unaffiliated reinsurance agreement, which has since been terminated. The termination of the auto program also was the last use of fronting companies.
EAIC's strategy is centered on strengthening its position in its existing market while evaluating new lines of business to determine if they fit with its business plan. As such, management has focused its expansion efforts on the independent owner operator trucking market segment operating in the short to intermediate haul range of up to 600 miles from its garaging location. EAIC employs effective loss control measures and pricing discipline and specializes in providing commercial automobile liability including physical damage, motor track cargo and surety bond coverage on a direct basis. It also reinsures a builder general liability program from one of its affiliates, Western Pacific Mutual Insurance Company, a Risk Retention Group and an affiliated home warranty program from, Warranty Underwriters Insurance Company.
EAIC's positive rating attributes are derived, in part, from management's focused operating strategy. A.M. Best anticipates continued strong net income performance from EAIC but remains concerned that a confluence of factors can lead to a decline in performance and profitability.
For current Best's Ratings and independent data on the captive and alternative insurance market, please visit Best's Captive Center.
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.