A.M. Best Affirms Ratings of State Auto Insurance Companies and Its Members
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OLDWICK, N.J.--(Business Wire)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of State Auto Insurance Companies (State Auto)and its members. Concurrently, A.M. Best has affirmed the ICR of "a-" and debt rating of "a-" on $100 million 6.25% senior unsecured notes, due 2013 issued by State Auto Financial Corporation (STFC) (NASDAQ: STFC). All the above named companies are headquartered in Columbus, OH. The outlook for all ratings is stable. (See below for a detailed listing of the companies.) The ratings reflect State Auto`s strong capitalization, generally favorable operating performance and excellent regional market franchise. These attributes reflect its long-standing regional market presence, well-established agency relationships, strong brand name recognition, diversified product offerings and adherence to sound underwriting fundamentals. Somewhat offsetting these positive rating factors is the group`s exposure to localized tornado/hail storms, hurricane activity in the Southeast and an earthquake stemming from the New Madrid fault in the Midwest. These exposures have historically been mitigated through comprehensive reinsurance programs and available credit facilities, as well as underwriting initiatives aimed at reducing catastrophe exposures. However, the increased frequency of storm losses in recent quarters has dampened State Auto`s underwriting profitability and overall capital position. In addition, State Auto`s capital position remains sensitive to changes in the market value of STFC and unaffiliated equity holdings, as evidenced by the large unrealized capital losses reported in recent years. Furthermore, State Auto has debt servicing requirements due to the above mentioned debt issuance and trust preferred securities, which could put a strain on future earnings. However, State Auto has continued to emphasize disciplined underwriting, pricing and claims processes. As a result of this strategy, State Auto has reported favorable operating results in most of the past five years. The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for State Auto Insurance Companies and its following members: * State Auto Florida Insurance Company * Patrons Mutual Insurance Company of Connecticut * Litchfield Mutual Fire Insurance Company * Beacon National Insurance Company * Beacon Lloyds Insurance Company * Farmers Casualty Insurance Company * Milbank Insurance Company * State Auto Property and Casualty Insurance Company * State Auto Insurance Company of Wisconsin * State Auto National Insurance Company * State Automobile Mutual Insurance Company * State Auto Insurance Company of Ohio * Meridian Citizens Mutual Insurance Company * Meridian Security Insurance Company For Best`s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/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. For more information, visit www.ambest.com. A.M. Best Co. Analysts Michael T. Venezia, 908-439-2200, ext. 5034 michael.venezia@ambest.com or Jeffrey Mango, CPA, 908-439-2200, ext. 5204 jeffrey.mango@ambest.com or Public Relations Jim Peavy,908-439-2200, ext. 5644 james.peavy@ambest.com or Rachelle Morrow,908-439-2200, ext. 5378 rachelle.morrow@ambest.com Copyright Business Wire 2009
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