AM Best


A.M. Best Revises Outlook to Negative for Central Insurance Companies and Its Members


CONTACTS:

Analyst(s)

Kevin Dorsey

(908) 439-2200, ext. 5401

kevin.dorseyl@ambest.com



Rick Decker

(908) 439-2200, ext. 5423

rick.decker@ambest.com

Public Relations

Rachelle Morrow

(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com

Jim Peavy

(908) 439-2200, ext. 5644

james.peavy@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK, N.J. - MAY 07, 2010 12:00 AM (EDT)
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating of A+ (Superior) and issuer credit ratings of "aa-" of Central Insurance Companies (CMIC) and its two members, All America Insurance Company (AAIC) and CMI Lloyds (CMIL) (Irving, TX), which operate under an intercompany pooling agreement, led by Central Mutual Insurance Company. All companies are domiciled in Van Wert, OH, except where specified.

The revised outlook for CMIC reflects the decline in its reported underwriting and operating results in recent years related to the increased frequency of weather-related losses, additional loss development in 2009 of homeowner claims related to Hurricane Ike in Texas, and the increase loss development in workers' compensation and construction defect claims. The unprofitable results have been greater than both CMIC's own historic norms and the average of the commercial casualty composite.

The superior ratings of CMIC's recognize its strong risk-adjusted capitalization, which remains fully supportive of the current ratings. The ratings also consider CMIC's historically positive operating performance, diversified commercial and personal lines product offerings and the group's long-standing agency relationships.

Offsetting these positive factors are the decline in CMIC's recent underwriting and operating results, its continued exposure to weather and catastrophe-related losses, fluctuating reserve development, elevated underwriting expense structure and the ongoing competitive pressures in the commercial lines segment.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.

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.

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