A.M. Best Assigns Ratings to Preferred Contractors Insurance Company Risk Retention Group, LLC

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has assigned a financial strength rating of B+ (Good) and an
issuer credit rating of "bbb-" to Preferred Contractors Insurance Company Risk
Retention Group, LLC (PCIC) (Billings, MT). The outlook assigned to both ratings
is stable.

These rating actions reflect PCIC`s adequate capitalization and its quality
management team, which has substantial expertise in marketing the type of
business PCIC writes. Also inuring to the ratings is incorporation of a
favorable business plan, upon which the profitability and liquidity metrics of
the ratings are based.

Partially offsetting these positive rating factors are the company`s volatile
operating results during the first three years of operation, high expense ratio
and limited business profile. An additional offsetting factor is execution risk
associated with the implementation of PCIC`s business plan.

Further rating factors are the company`s fundamental business strategies, which
include providing stable insurance coverage coupled with quality service for its
members. Reflecting its limited business profile, PCIC as an insurer is
exclusively oriented toward one class of insures, who act to concatenate the
company`s spread of risk. PCIC maintains a conservative operating strategy by
limiting participation in its insurance program to members. Its geographic
diversification is adequate since PCIC is registered in 20 states and has
registrations pending in other states. The company is writing a consistent book
of business and is familiar with the accounts it writes. The insurance program
provides general liability coverage to general contractors and subcontractors in
the residential and commercial construction industry. The company has
consistently posted negative underwriting profits in its three short years of
operations. However, the ratings recognize PCIC`s financial projected operating
results indicating favorable returns.

A.M. Best has concerns with PCIC meeting the goals included in its business
plan, with the existing competitive pressures as well as economic volatility.
A.M. Best will closely monitor the quarterly performance of PCIC, and any
material negative deviation from its business plan in terms of management,
earnings, capitalization or risk profile could result in negative rating
pressure and a possibly downgrading of the ratings.

A.M. Best remains the leading rating agency of captive insurers rating a wide
variety of more than 200 captives in the United States and throughout the world.

For current Best`s Credit Ratings and independent data on the captive and
alternative insurance market, please visit www.ambest.com/captive.

The principal methodologies used in determining these ratings, including any
additional methodologies and factors, which 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 Company
Analysts
Alexander Sarfo, 908-439-2200, ext. 5779
alexander.sarfo@ambest.com
or
Steve Chirico, CPA, 908-439-2200, ext. 5097
steven.chirico@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

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