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| [March 14, 2013] |
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A.M. Best Revises Outlook to Stable for Springfield Insurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has revised the outlook to stable from positive and
affirmed the financial strength of B+ (Good) and issuer credit rating of
"bbb-" of Springfield Insurance Company (Springfield) (Covina,
CA (News - Alert)).
The revised outlook reflects the increase in Springfield's claims as
well as its prior year loss development during 2012. This has produced a
sizable operating loss in 2012. However, the current outlook reflects
A.M. Best's expectation that despite its negative trend in earnings
during 2012, Springfield's risk-adjusted capitalization will continue to
support its current ratings.
The rating affirmations recognize Springfield's positive trend in
operating earnings in recent years, improved capitalization,
conservative underwriting strategy as well as management's expertise and
knowledge of the grocery marketplace. These positive rating factors are
partially offset by Springfield's large premium dependence on Clifornia
workers' compensation where pricing and regulatory reform volatility can
cause adverse results along with the recent increases in adverse loss
development. As a result, Springfield is exposed to changes in the
legislative and judicial environment as well as competitive pressures.
The outlook could again, be revised if Springfield's operating
performance does not return to a more profitable footing in the short
term or if adverse loss reserve development continues to create a drag
on the company's earnings.
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"; "The
Treatment of Terrorism Risk in the Rating Evaluation"; and
"Understanding BCAR for Property/Casualty Insurers." 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS
RESERVED.
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