A.M. Best Affirms Ratings of SECURA Insurance Companies; Revises Outlook of Issuer Credit Rating to Negative

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit rating (ICR) of "a+" of SECURA Insurance Companies (SECURA) (Appleton, WI), which includes the operations of SECURA Insurance, A Mutual Company and its wholly owned subsidiary, SECURA Supreme Insurance Company. The outlook for the FSR is stable, while the outlook for the ICR has been revised to negative from stable.

The rating affirmations recognize SECURA's strong risk-adjusted capitalization, stable market presence and the benefits derived from its ongoing agency cultivation strategies. Further, the stable outlook on the FSR acknowledges SECURA's historically profitable operations and reflects A.M. Best's expectation that operating earnings will continue to drive surplus growth.

The revised outlook for the ICR reflects the variability in SECURA's underwriting performance in recent years, which has caused operating performance to decline from historical levels. As a result, the group's return measures have fallen below those of the commercial casualty industry composite. Since 2007, underwriting results have suffered due to increased weather-related and large loss activity coupled with competitive market conditions. In addition, the performance of SECURA's investments peaked in 2007 and has yet to return-on a relative or absolute basis-to the same level.

Negative rating action on SECURA's ICR will occur over the near to mid term if there is a continued decline in SECURA's underwriting profitability and/or considerable deterioration in its risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio.

The principal 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"; "The Treatment of Terrorism Risk in the Rating Evaluation"; "Catastrophe Analysis in A.M. Best Ratings"; and "Rating Members of Insurance Groups." 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.