A.M. Best Downgrades Ratings of Commercial & Manufacturers Insurance Limited; Revises Outlook to Negative.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to B+ (Good) from B++ (Good) and issuer credit rating to "bbb-" from "bbb+" of Commercial & Manufacturers Insurance Limited (CMI) (Bermuda) (formerly known as Casting Manufacturers Insurance Limited). The outlook for the ratings has been revised to negative from stable.

These rating actions reflect CMI's volatile operating performance and the gradual decline in its balance sheet strength and market profile. A.M. Best also remains concerned with the amount of time CMI has needed to generate audited financial statements.

The ratings consider CMI's low underwriting leverage, conservative operating strategy and strong liquidity. The ratings also recognize the unique position of CMI and management's expertise in serving a niche market covering the commercial liability needs of members of the Tooling, Manufacturing & Technologies Association over many years.

Partially offsetting these positive rating factors are CMI's generally declining surplus levels from negative operating results and its weakened market profile in the softening insurance market. In addition, it has high gross and net retentions per occurrence relative to its surplus and premium volumes. CMI's volatile overall operating performance reflects some large claims in recent years, and competitive market conditions have resulted in stockholder redemptions and premium fluctuations over the years. As overall operating results have been burdened by elevated loss expenses, the company has taken steps to reduce operating expenses. Nevertheless, high operating expense ratios will continue to present a challenge. CMI's limited market profile is due to its low premium volume and geographical concentration in the Michigan machine/tooling industry, a sector subject to difficult economic conditions.

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.