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 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 operating results, excellent
risk-adjusted capitalization, prudent reserving practices and the
financial flexibility afforded 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 management’s 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, as well as the execution risk associated with continued
While A.M. Best believes EIHI and its operating companies’ are well
positioned at their current ratings, factors that could lead to negative
rating actions include soft market conditions or lack of execution in
its ongoing diversification strategies leading to a deterioration in
underwriting and operating results to a level below peers for a
sustained period or should there be a decline in the group’s
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. Key criteria utilized include: “Rating
Members of Insurance Groups”; “Risk Management and the Rating Process
for Insurance Companies”; “Insurance Holding Company and Debt Ratings”;
“Understanding BCAR for Property/Casualty Insurers”; and “The Treatment
of Terrorism Risk in the Rating Evaluation.” Best’s Credit Rating
Methodology can be found at found at www.ambest.com/ratings/methodology.
Founded in 1899, 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 © 2012 by A.M. Best Company, Inc.ALL RIGHTS
A.M. Best Co.W. Dolson Smith, CFASenior
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Lagomarsino, CFAAssistant Vice President(908)
PeavyAssistant Vice President, Public Relations(908)
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Source: A.M. Best Co.