A.M. Best Co. said it has affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings of "a-" of Employers Mutual Casualty Company (EMCC) and its six property/ casualty subsidiaries, which operate under an inter-company pooling agreement led by EMCC and its separately rated subsidiary, EMC Reinsurance Company (EMC Re), a reinsurance company owned indirectly by EMCC.

In a release, the insurance rating company said concurrently, A.M. Best has affirmed the ICR of "bbb-" of EMC Insurance Group Inc. (EMCI), a downstream holding company majority owned by EMCC and the immediate parent of EMC Re. The outlook for all ratings is positive. All of the above named companies are headquartered in Des Moines, IA.

A.M. Best said the ratings of EMCC and EMC Re reflect their strong level of risk-adjusted capital, which is supported by generally positive levels of pre-tax operating and net income; favorable development of prior years' loss and loss adjustment expense reserves; generally favorable core underwriting results; and the benefits the companies will derive from management's actions over the past several years associated with pricing and risk selection, claims management and reserving methodology.

Partially offsetting these positive rating factors is EMCC and EMC Re's exposure to catastrophe and weather-related events, which was evident in 2011; above-average levels of common stock leverage; potential for a lower level of favorable development of prior years' loss reserves in the future; and the continuing impact of challenging insurance market conditions, particularly on EMCC's primary business. Further offsetting EMC Re's ratings are its dependence on EMCC as a production source.

The ratings of EMCI reflect the capital strength of its property/ casualty affiliates, the support of EMCC and the absence of financial leverage, with no public debt outstanding.

Key rating factors that may lead to positive rating actions include EMCC and EMC Re maintaining strong risk-adjusted capitalization while reporting improved operating and underwriting results. However, factors that may lead to negative rating actions include a trend of increasingly deteriorating underwriting and operating performance to a level below peers or an erosion of surplus to an extent to cause a significant decline in risk- adjusted capitalization.

The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for Employers Mutual Casualty Company and its following property/ casualty subsidiaries:

-Dakota Fire Insurance Company

-EMC Property and Casualty Company

-EMCASCO Insurance Company

-Hamilton Mutual Insurance Company

-Illinois EMCASCO Insurance Company

-Union Insurance Company of Providence

More information:

www.ambest.com

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