A.M. Best Downgrades Ratings Of Mt. Morris Mutual Insurance Company

<p><org>A.M. Best Co.</org> has downgraded the financial strength rating (FSR) to B (Fair) from B++ (Good) and issuer credit rating (ICR) to “bb+” from “bbb” of <org>Mt. Morris Mutual Insurance Company</org> (Mt. Morris) (<location value="LU/us.wi.coloma" idsrc="xmltag.org">Coloma, WI</location>). The outlook for the ICR has been revised to negative from stable, while the outlook for the FSR is stable.</p><p>These rating actions follow Mt. Morris’ approximate 40% decline in policyholder surplus as of the second quarter 2011, due to its significant underwriting losses. As a result, the company’s risk-adjusted capitalization substantially deteriorated. The ratings also recognize the company’s elevated underwriting and investment leverage, limited product diversification and geographic concentration of risks in <location value="LS/us.wi" idsrc="xmltag.org">Wisconsin</location>, which exposes Mt. Morris to competitive market conditions, as well as frequent and severe weather-related events.</p><p>Offsetting these negative rating factors are Mt. Morris’ generally positive operating performance over the last five years and local market knowledge.</p><p>The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Catastrophe Risk Management Incorporated Within the Rating Analysis”; Understanding BCAR for Property/Casualty Insurers”; “Natural Catastrophe Stress Test Methodology”; and “Catastrophe Analysis in A.M. Best Ratings.” Methodologies can be found at <a href="http://www.ambest.com/ratings/methodology">http://www.ambest.com/ratings/methodology</a>.</p>