OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A- (Excellent) and issuer credit ratings (ICR) of "a-"of Eastern
Alliance Insurance Group (EAIG) and its members. Concurrently, A.M.
Best has affirmed the ICR of "bbb-" of the holding company, Eastern
Insurance Holdings, Inc. (EHI) (NASDAQ: EIHI). The outlook for the
above ratings has been revised to positive from stable.
A.M. Best also has assigned an FSR of A- (Excellent) and ICR of
"a-" to Eastern Advantage Assurance Company (EAAC), making it a member
of EAIG. The outlook assigned to these ratings is positive. All
companies are domiciled in Lancaster, PA.
EAIG consists of Eastern Alliance Insurance Company (EAIC), Allied
Eastern Indemnity Company (AEIC) and EAAC, and all operate under an
intercompany pooling agreement with EAAC recently becoming a member of
EAIG.
The ratings recognize EAIG's strong operating results, excellent
capitalization and diversified organizational structure, providing
multiple revenue streams. EAIG provides specialty workers'
compensation products and services to employers in rural and suburban
Pennsylvania, Delaware, Maryland and select Southeastern states. The
cultivation of a loyal agency base operating in preferred territories
has resulted in profitable growth as indicated by the group's
five-year average combined ratio, which remains well below the
workers' compensation composite average. While the majority of
business is written within Pennsylvania, cautious expansion plans into
other states somewhat reduce the group's exposure to regulatory
changes within any given state. Financial leverage at the intermediate
holding company, Eastern Holding Company Ltd. (EHC), is minimal and
acceptable for the current rating level. Given the historical
profitability and financial flexibility of Eastern Re Ltd SPC in terms
of dividend capacity, debt servicing is not expected to be funded via
dividends from EAIC, AEIC or EAAC.
Partially offsetting these positive factors is the group's
concentration, both geographically and by product line, which
potentially exposes it to increased risk of regulatory or legislative
changes. Despite this concern, the rating outlook reflects the strong
operating results, focused underwriting initiatives and aggressive
claims closures, which in combination with conservative reserving
practices, have resulted in significant improvement in overall
capitalization in recent years.
Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and
ICR of "a-" of Eastern Life and Health Insurance Company (Eastern Life
and Health) (Lancaster, PA). The outlook for both ratings is stable.
The affirmation of the ratings for Eastern Life and Health
reflects the parent's agreement to guarantee the liabilities of the
company, as well as to maintain a favorable level of risk-based
capital. Eastern Life and Health maintains a very strong level of
risk-based capital and has enhanced its underwriting methodology and
risk selection process, which has contributed to improving loss ratios
across its core business lines over the past year. Moreover, the
company continues to make progress towards its goal to cross sell
products within the other distribution channels of EHI. However, A.M.
Best believes that Eastern Life and Health will be challenged over the
next few years to further establish its brand name and maintain
adequate operating results as more competition begins to target its
core markets.
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.
Source: A.M. Best Company
Contact: A.M. Best Company
Analysts:
Gordon McLean, 908-439-2200, ext. 5304
gordon.mclean@ambest.com
or
Michelle Baurkot, 908-439-2200, ext. 5507
michelle.baurkot@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