OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the financial strength rating (FSR) to E (Under Regulatory Supervision) from C++ (Marginal) and the issuer credit rating (ICR) to “rs” from “b” of Millers First Insurance Company(Millers) (Alton, IL). A.M. Best also has downgraded the FSR to C- (Weak) from C++ (Marginal) and the ICR to “cc” from “b” of Millers’ wholly owned subsidiary,Millers Classified Insurance Company (Classified) (Madison, WI). The ratings for Classified have been placed under review with negative implications.

The rating actions on Millers follow the announcement that the Illinois Department of Insurance has issued an order of conservation for Millers, effective June 11, 2012. The order follows the company’s severe catastrophe loss activity throughout 2010 into the current quarter, which has severely depleted its capital position. An order of rehabilitation is pending and all valid claims continue to be paid in full.

While the order does not include Classified since it is domiciled in Wisconsin and is outside the regulatory purview of the Illinois Department of Insurance, the downgrading of the ratings for Classified is primarily due to its current financial condition with a reduction in capitalization primarily from the same storms. The under review status of Classified is due to its potential for additional underwriting losses, which could further weaken its capital position, as well as the potential for some form of regulatory action relating to Classified’s location. A.M. Best expects to resolve the under review status of Classified once these issues have been clarified and/or resolved.

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: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Catastrophe Analysis in A.M. Best Ratings.” Best’s Credit Rating Methodology can be 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 RESERVED.

A.M. Best Co.
Neil Das Gupta, 908-439-2200, ext. 5206
Senior Financial Analyst
neil.dasgupta@ambest.com
or
Joseph Burtone, 908-439-2200, ext. 5125
Assistant Vice President
joseph.burtone@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Source: A.M. Best Co.