A.M. Best Affirms Ratings of Baldwin & Lyons, Incorporated and Its Subsidiaries.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa" of the Baldwin & Lyons Group (the group), which includes Protective Insurance Company (Protective) (Indianapolis, IN). Concurrently, A.M. Best has affirmed the FSR of A+ (Superior) and the ICR of "aa" of Sagamore Insurance Company (Sagamore) (Indianapolis, IN), a wholly owned, separately rated subsidiary of Protective. A.M. Best also has affirmed the ICR of "a" of the group's publicly traded parent, Baldwin & Lyons, Incorporated (B&L) (Indianapolis, IN) (NASDAQ/NM: BWINA and BWINB). The outlook for all ratings is stable.

The group's ratings reflect its superior risk-adjusted capitalization, excellent operating performance and solid market position in its core commercial trucking market. The ratings also reflect the additional financial flexibility provided by B&L. These positive rating attributes are partially offset by the long-term competitive nature of the group's core markets, elevated common stock investment leverage, shareholder dividends, and a degree of customer concentration, with its largest customer accounting for more than 20% of premiums. Despite these negative factors, the outlook reflects A.M. Best's expectation that the group will continue to generate positive earnings and organic surplus generation over the near term despite increasing competitive pressures.

Sagamore's ratings acknowledge its superior risk-adjusted capitalization, favorable operating performance and conservative balance sheet. The ratings also reflect the company's strategic role within the group, the explicit support provided by an aggregate stop loss agreement with Protective and the financial flexibility Sagamore enjoys from its ultimate parent, B&L.

These positive rating factors are partially offset by the company's modest fluctuation in operating earnings over the past five years and the highly competitive nature of its core non-standard auto and small fleet commercial trucking lines of business. Despite these offsetting factors, A.M. Best anticipates that Sagamore will continue to generate organic increases in surplus through profitable operating performance.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.