The rating affirmations reflect Grangeís conservative underwriting leverage, long-term agency relationships, extensive knowledge of the operating territory and its ability to quickly implement operating changes due to its size and management structure.
The negative outlook reflects the trend of weakened underwriting results in recent years and the potential impact that future underwriting losses could have on the companyís capitalization.
Management recognizes the current competitive pressures within Grangeís business segment, the challenges to minimize general operating expenses and its exposure to fire and weather-related losses while containing reinsurance costs. Over the past two years, Grangeís underwriting losses were attributed mostly to higher than anticipated fire-related claims that affected its predominant property book of business, depressed rate levels due to competitive market conditions and elevated reinsurance costs.
The methodology used in determining these ratings is Bestís Credit Rating Methodology, which provides a comprehensive explanation of A.M. Bestís rating process and contains the different rating criteria employed in the rating process. Bestís Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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