A.M. Best Affirms Ratings of Allstate New Jersey Insurance Group Members

Thu Feb 14, 2013 3:36pm EST

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OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent)
and issuer credit ratings (ICR) of "a-" of the members of the Allstate New
Jersey Insurance Group (collectively referred to as Allstate New
Jersey)(headquartered in Bridgewater, NJ). The outlook for all ratings is
stable. Allstate New Jersey`s ultimate parent is The Allstate Corporation
(Allstate) (Northbrook, IL) [NYSE: ALL]. (See below for a detailed listing of
the companies.) 

The rating affirmations are based on Allstate New Jersey`s adequate
risk-adjusted capitalization and management`s local market knowledge. Allstate
New Jersey continues to undertake various actions to enhance its overall
operating results as the dedicated New Jersey property/casualty carrier for
Allstate. In addition, Allstate New Jersey`s operating performance has generally
benefited from its ability to quickly react to changing market conditions.
Furthermore, the group`s private passenger automobile margins have improved due
to recent rate activity, new business acceptance criteria and renewal book
actions. To better match price with risk, Allstate New Jersey`s recent actions
to improve its homeowners` business have included rate increases, targeted
customer/property inspections and a reduction in mono-line homeowners` exposure.
Additionally, the ratings acknowledge the operational and financial benefits
Allstate New Jersey receives as an affiliate of Allstate Insurance Company,
which is a market leader in the U.S. insurance industry. 

Allstate New Jersey`s positive rating factors are somewhat offset by its
geographic concentration within one state, which exposes its capitalization and
earnings to weather-related losses, competitive pressures and regulatory
mandates. This exposure has been evident in recent years as its homeowners and
auto physical damage lines of business were negatively impacted by net
catastrophe losses totaling approximately $260 million in 2012, primarily from
Superstorm Sandy, and $95 million in 2011, with an overall combined ratio impact
of approximately 22 points and 12 points, respectively. However, to reduce
surplus volatility, Allstate New Jersey has not paid dividends in recent years
and maintains a conservative investment portfolio. 

While the outlook for the ratings of Allstate New Jersey is stable, the ratings
could be downgraded if underwriting performance and/or capital levels fall
materially short of A.M. Best`s expectations. 

The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for the following
members of Allstate New Jersey Insurance Group:

 • Allstate New Jersey Insurance Company                             
 
• Allstate New Jersey Property and Casualty Insurance Company      
 
• Encompass Insurance Company of New Jersey                        
 
• Encompass Property and Casualty Insurance Company of New Jersey  
 
• Esurance Insurance Company of New Jersey                         


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. Key criteria utilized include: "Risk Management and the Rating Process
for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers";
"Catastrophe Analysis in A.M. Best Ratings"; and "Rating Members of Insurance
Groups." Best`s Credit Rating Methodology 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. For more information, visit
www.ambest.com. 

Copyright © 2013 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best Co.
Michael T. Venezia, 908-439-2200, ext. 5034
Senior Financial Analyst
michael.venezia@ambest.com
or
Gary Davis, 908-439-2200, ext. 5665
Assistant Vice President
gary.davis@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

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