A.M. Best Downgrades Ratings of Mid-Continent Insurance Company.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating (FSR) to A- (Excellent) from A (Excellent) and the issuer credit rating (ICR) to "a-" from "a" for Mid-Continent Insurance Company (Mid-Continent) (Somerset, PA). The outlook for these ratings is stable.

These rating actions follow Mid-Continent's significant loss reserve strengthening that occurred in 2007 to address continued adverse reserve development, which resulted in a sizeable underwriting loss. However, A.M. Best is encouraged by recent actions taken by management regarding claims handling and reserving procedures in response to improving the reserving position of the company.

The ratings also reflect Mid-Continent's adequate risk-adjusted capitalization and well established market presence. Prior to 2007, the company consistently posted positive underwriting profits, indicative of management's stringent underwriting principles and exceptional service standards.

Partially offsetting these positive factors are Mid-Continent's limited geographic spread of risk, elevated expense structure and inadequate reserving trends. In 2007, the company's loss reserves were adversely impacted due to inadequate prior year reserving practices and to account for a significant number of liability claims for which reserves had been insufficient.

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.