A.M. Best Affirms and Assigns Ratings to Auto-Owners Insurance Group and Auto-Owners Life Insurance Company

A.M. Best Affirms and Assigns Ratings to Auto-Owners Insurance Group and Auto-Owners Life Insurance Company

A.M. Best Co. has affirmed the financial strength rating (FSR) of A++ (Superior) and assigned issuer credit ratings (ICR) of “ aa+” to Auto-Owners Insurance Group (Auto-Owners) and its members. Concurrently, A.M. Best has affirmed the FSR of A+ (Superior) and assigned an ICR of “aa-”to Auto-Owners Life Insurance Company (Auto-Owners Life). All the above companies are located in Lansing, MI. The outlook for all ratings is stable.

The affirmation of the ratings of Auto-Owners reflects its outstanding capitalization, strong earnings and conservative operating philosophy. These positive rating factors are partially offset by Auto Owners’ adverse loss reserve development in three of the last five years and its business concentration in Florida and Michigan, which expose the group to weather-related catastrophic events and unfavorable changes in the legislative, judicial and regulatory environment.

Auto-Owners’ operating results were achieved due to its well-established independent agency relationships, relatively low loss adjustment expenses, diversified product offerings and adherence to strict underwriting fundamentals. The group’s solid capital position is reflective of management’s conservative operating philosophy and favorable underwriting leverage measures.

The ratings also acknowledge Auto-Owners’ strong market presence as one of the 25 largest property/casualty insurance organizations in the United States, with more than $4.3 billion in net premiums written at year-end 2006.

As a strategic life/health and annuity arm of Auto-Owners, Auto-Owners Life’s ratings reflect the benefits derived from Auto-Owners’ strong capital base and resources available through shared management, technology and distribution. While Auto-Owners Life continues to have relatively limited success in penetrating the much larger property/casualty base, its overall statutory financial results remain stable and sustainable over the five year period. However, the sales and earnings contributions generated by its life and annuity operations remain modest relative to the total enterprise. Nevertheless, Auto-Owners Life is viewed as a strategic contributor to the ongoing success of Auto-Owners.

A.M. Best believes Auto-Owners is well positioned to support future growth based on its strong capitalization, historically solid operating performance and controlled diversification initiatives.

The FSR of A++ (Superior) has been affirmed and ICRs of “aa+” have been assigned to Auto-Owners Insurance Group and its following property/casualty members:
Auto-Owners Insurance Company
Home-Owners Insurance Company
Owners Insurance Company
Property-Owners Insurance Company
Southern-Owners Insurance Company

The FSR of A+ (Superior) has been affirmed and the ICR of “aa-” has been assigned to the life/health and annuity arm of Auto-Owners, Auto-Owners Life Insurance Company.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.
Contacts

A.M. Best Co.
Kevin Dorsey—P/C, 908-439-2200, ext. 5401
kevin.dorsey {at} ambest(.)com
or
Raj Shah—L/H, 908-439-2200, ext. 5409
raj.shah {at} ambest(.)com
or
Jim Peavy, 908-439-2200, ext. 5644
james.peavy {at} ambest(.)com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow {at} ambest(.)com