A.M. Best Affirms Ratings of Old Republic Insurance Company of Canada

Business Wire,  June 24, 2008  

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OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a+" of Old Republic Insurance Company of Canada (Hamilton, Ontario). The outlook for both ratings is stable.

The ratings of Old Republic Insurance Company of Canada are based on its excellent capitalization, solid operating performance and consistently favorable reserve development. Stable underwriting results are attributable to improved rate adequacy and stricter underwriting guidelines. In addition, the company has been re-balancing its book of business to focus on small to medium-sized commercial accounts, which have been less volatile to pricing pressures as compared to larger commercial accounts. The ratings also acknowledge the benefits derived from the financial support and flexibility afforded by its parent company, Old Republic International Corporation (ORI) (Chicago, IL), as well as the synergies it realizes as an affiliate of Great West Casualty Company (South Sioux City, NE). These affiliates integrate their expertise in underwriting, investment guidelines, claims processes, reinsurance protection and technology platforms.

Partially offsetting these positive rating factors are Old Republic Insurance Company of Canada's limited product offerings and softening market conditions. With a majority of its business concentrated in the commercial trucking segment, the company is exposed to the cyclicality and volatility associated with this market segment. Although it has taken aggressive actions to maintain profitability, which have materialized favorably, the competitive marketplace will continue to be a challenge, and a certain degree of variability is expected in the company's profitability.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

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.

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