OLDWICK, N.J. --(BUSINESS WIRE)-- A.M. Best Co. has revised the outlook for the issuer credit rating (ICR) to negative from stable and affirmed the financial strength rating (FSR) of B++ (Good) and ICR of “bbb+” of ARI Mutual Insurance Company (ARI) (headquartered in Newtown, PA ). The outlook for the FSR remains stable. The negative outlook on the ICR reflects A.M. Best’s concerns that underwriting results may be slow to improve given the level of adverse loss reserve development recorded in recent years, including 2013. As a result, weak earnings may make it more difficult for the company to significantly improve its level of risk-adjusted capitalization in the near term. Should the ICR be downgraded to “bbb,” the FSR would remain at B++ (Good). As a result, the current outlook for the FSR is stable. The ratings reflect good risk-adjusted capitalization, historical operating profitability (prior to 2011), and local presence in the New Jersey commercial auto insurance market. Partially offsetting these positive rating factors are the weak, albeit improving, operating results in recent years; the variability of the group's loss reserve position, as evidenced by areas of adverse loss reserve development reported on prior accident years; as well as the narrow geographic and product spread of risk, which exposes the group to changes in the regulatory, legislative and competitive landscape. Factors that may lead to negative rating actions include deterioration in underwriting and operating performance, continued adverse loss reserve development and erosion of surplus that could consequently cause a decline in the group's risk-adjusted capitalization. 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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology . 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED. A.M. Best Co. Robert Valenta , 908-439-2200, ext. 5291 Senior Financial Analyst email@example.com or Gerard Altonji , 908-439-2200, ext. 5626 Assistant Vice President firstname.lastname@example.org or Rachelle Morrow , 908-439-2200, ext. 5378 Senior Manager, Public Relations email@example.com or Jim Peavy , 908-439-2200, ext. 5644 Assistant Vice President, Public Relations firstname.lastname@example.org Source: A.M. Best Co.
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