A.M. Best Downgrades Ratings of Illinois Casualty Company.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and issuer credit rating to "a-" from "a" of Illinois Casualty Company (Illinois Casualty) (Rock Island, IL). The outlook for both ratings has been revised to stable from negative.

These rating actions reflect Illinois Casualty's significant deterioration in underwriting and operating results that occurred in 2007 and the resultant negative impact on risk-adjusted capitalization. The poor results in 2007 primarily were due to higher current accident year reserves as well as continued adverse loss reserve development on prior accident years. While management has implemented various initiatives to improve loss reserve development trends, it will take some time to determine the effectiveness of these measures, especially considering the company's expansion, both geographically and into new lines of business, during a period of soft market conditions.

The ratings recognize Illinois Casualty's supportive risk-adjusted capitalization despite the aforementioned weakening, favorable underwriting performance during the earlier portion of the prior five-year period and solid liquidity. The company's positive rating attributes are supported by management's niche underwriting expertise and long-standing position within the alcoholic beverages industry in the Midwest. The ratings also reflect management's projections for a return to operating profitability and maintenance of supportive risk-adjusted capital over the near term.

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.