A.M. Best Affirms Ratings of Bancinsurance Corporation and Ohio Indemnity Company; Maintains Negative Outlook

Business Wire, Oct 2, 2008

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of "a-" of Ohio Indemnity Company (Ohio Indemnity) (Columbus, OH). Concurrently, A.M. Best has affirmed the ICR of "bbb-" of Ohio Indemnity's parent, Bancinsurance Corporation (Bancinsurance) (OTC BB: BCIS). The outlook for all ratings is negative.

The ratings of Ohio Indemnity continue to reflect its excellent risk-adjusted capitalization, solid operating results and its position providing specialty insurance products to banks, credit unions and finance companies. The ratings also take into account the settlement of various arbitrations with three of the four ceding companies related to the discontinued bail and immigration bond program, which significantly reduces future uncertainties associated with that program. Additionally, the ratings recognize Ohio Indemnity's success in retaining its core clients while generating solid earnings.

Somewhat offsetting these positive ratings factors are growth in new specialty programs in recent years, concentration risk within its distribution (two clients represent over 10% of gross written premiums) and the uncertainties related to the SEC's ongoing investigation of Bancinsurance and three executives including its chief executive officer, chief financial officer and vice president of specialty products, who received "Wells Notices" from the SEC's Division of Enforcement in October 2007. A.M. Best believes that the SEC investigation could be a distraction to the three executives, and the cost of the Wells Notices process has negatively impacted Bancinsurance's overall earnings (although remaining solid) in 2007 and 2008, which has resulted in a modest decline in Bancinsurance's fixed coverage ratios. However, Bancinsurance maintains moderate financial leverage, and the enterprise has ample liquidity.

The outlook reflects the continued uncertainty surrounding the SEC investigation.

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.