A.M. Best Affirms Financial Strength Ratings of Erie Insurance Group.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 5, 2004 A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) for the property/casualty affiliates of Erie Insurance Group Erie Insurance Group, (NASDAQ: ERIE) is a multi-line insurance company, offering auto, home, commercial and life insurance through a network of independent insurance agents. (Erie) managed by Erie Indemnity Company (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :ERIE) (Erie, PA). Concurrently, A.M. Best has affirmed the financial strength rating of A (Excellent) of Erie's life affiliate, Erie Family Life Insurance Company (OTC OTC See: Over-the-counter. OTC See over-the-counter market (OTC). BB:ERIF ERIF Electricity Rent Inclusion Factor (office rental space lease) ERIF Embedded Routing Information Field .OB) (Erie, PA). The rating outlooks are stable for all companies. The affirmation of the property/casualty affiliates reflects Erie's strong risk-adjusted capitalization and modest premium leverage. The group's capital position is favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. impacted by the financial position of its publicly traded management company, Erie Indemnity Company, which as of year-end 2003, had over $1 billion in shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. and no long-term debt Long-Term Debt Loans and financial obligations lasting over one year. Notes: For example debts obligations such as bonds and notes which have maturities greater than one year would be considered long-term debt. obligations. Erie maintains a strong market presence reflective of its reputation for excellent customer service, strong independent agency relationships and extensive local market knowledge. This combination enables the group to record overall renewal retention ratios of more than 90% across most lines of business. Although Erie maintains a long-term investment strategy that historically generated favorable capital appreciation, its predominantly stock weighted portfolio has led to above average investment leverage. To lessen its exposure, Erie considerably reduced its common stock portfolio in the fourth quarter of 2003. Erie's underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. experience deteriorated over the last several years due to inadequate rates, increasing loss cost trends and weather-related events. Although the underwriting experience remained unfavorable, performance in 2003 improved due to the implementation of rate increases and refined risk segmentation as part of a comprehensive plan to address underwriting profitability. A.M. Best anticipates that Erie's results will continue to lag its peer group over the near term as a result of additional rate needs, as well as the length of time required to flow through earnings due to the utilization of annual policy terms. However, Erie's strong risk-adjusted capitalization and financial flexibility at the management company remain significant offsetting factors. The rating affirmation of Erie Family Life Insurance Company is based on its strategic position within Erie, financial support of the parent and its improved investment portfolio. Partially offsetting these factors are a significant growth in interest-sensitive annuity business in recent years and geographic concentration risk with respect to premium production. The financial strength rating of A+ (Superior) has been affirmed for Erie Insurance Group and its following property/casualty affiliates: -- Erie Insurance Exchange -- Erie Insurance Company -- Erie Insurance Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- Erie Insurance Property & Casualty Company -- Flagship City Insurance Company A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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