OLDWICK, N.J.--(BUSINESS WIRE)--
A.M. Best Co. has affirmed the financial strength rating of A
(Excellent) and issuer credit ratings (ICR) of “a” of the
property/casualty subsidiaries of Eastern Insurance Holdings, Inc.
(EIHI) [NASDAQ: EIHI], which consist of Eastern Alliance Insurance
Company, Allied Eastern Indemnity Company, Eastern
Advantage Assurance Company and Employers Security Insurance
Company (Indianapolis, IN) (collectedly referred to as Eastern
Alliance Insurance Group [EAIG]). EAIG operates under an
intercompany pooling agreement. Concurrently, A.M. Best has affirmed the
ICR of “bbb” of EIHI. The outlook for all ratings is stable. All
companies are domiciled in Lancaster, PA, unless otherwise specified.
The ratings recognize EAIG’s strong underwriting and overall operating
performance, excellent risk-adjusted capitalization, prudent reserving
practices and the financial flexibility afforded it by its publicly
traded, debt free parent, EIHI. The cultivation of a loyal agency base
within preferred territories has produced profitable growth as evidenced
by the group’s five-year average combined and operating ratios, which
outperformed the workers’ compensation composite by a significant
margin. EAIG’s strong underwriting performance reflects its commitment
to maintain sound pricing, a proactive return to wellness program and
utilization of “compromise and release” agreements. This approach has
allowed EAIG to close claims more quickly and at a lower average cost
than the typical workers’ compensation writer.
Partially offsetting these positive rating factors are EAIG’s product
concentration as a monoline workers’ compensation writer, which
potentially exposes it to increased risk of regulatory or legislative
changes, below-average investment ratio, as well as the execution risks
associated with ongoing state expansion initiatives. Despite these
concerns, the outlook acknowledges EAIG’s prudent operating strategy,
focused underwriting initiatives and aggressive claims management, which
have contributed to strong earnings over the long term.
While A.M. Best believes the ratings for EAIG are appropriately
positioned at their present level, future positive rating actions may
result from its continued strong underwriting and operating performance.
Factors that could lead to negative rating actions include a lack of
underwriting discipline or unsatisfactory execution of ongoing
diversification strategies leading to the group’s underwriting and
overall profitability underperforming its peers for a sustained period
or should there be a material decline in its risk-adjusted
capitalization.
The methodology used in determining these ratings is Best’s Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best’s rating process and contains the different rating criteria
employed in the rating process. Best’s Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world’s oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc.ALL RIGHTS
RESERVED.
A.M. Best Co.
W. Dolson Smith, CFA
Senior
Financial Analyst
(908) 439-2200, ext. 5379
w.dolson.smith@ambest.com
or
Michael
Lagomarsino, CFA
Assistant Vice President
(908)
439-2200, ext. 5810
michael.lagomarsino@ambest.com
or
Rachelle
Morrow
Senior Manager, Public Relations
(908)
439-5378
rachelle.morrow@ambest.com
or
Jim
Peavy
Assistant Vice President, Public Relations
(908)
439-2200, ext. 5644
james.peavy@ambest.com
Source: A.M. Best Co.