A.M. Best Upgrades Ratings of Country-Wide Insurance Company

Business Wire,  May 14, 2008  

Tags: A.M. Best Co.

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OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating (FSR) to B- (Fair) from C++ (Marginal) and issuer credit rating to "bb-" from "b" of Country-Wide Insurance Company (Country-Wide) (New York, NY). The outlook for both ratings is stable.

The upgrades reflect Country-Wide's strengthened risk-adjusted capitalization, improved operating performance and extensive local market expertise in the downstate New York automobile marketplace. Recent operating profitability has been attributed to management's focus on core underwriting results and improved internal controls. Specific corrective actions included stringent underwriting, improved rate adequacy and enhanced claim controls. Underwriting performance further benefited from management's increased emphasis on reserve adequacy and technology advancements.

Offsetting factors include Country-Wide's elevated gross underwriting leverage measures and dependence on reinsurance for surplus relief as measured by its reinsurance recoverable balance and high ceded reinsurance leverage ratio. Also, unfavorable loss reserve development trends in prior years dampened underwriting results and severely weakened risk-adjusted capitalization. Country-Wide's business concentration exposes earnings to changes in the regulatory and legislative environment as well as competitive market pressures.

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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