A.M. Best Upgrades Rating for Medical Mutual Insurance Company of Maine.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the issuer credit rating (ICR) to "bbb+" from "bbb" for the Medical Mutual Insurance Company of Maine (MMIC) and affirmed the financial strength rating (FSR) of B++ (Good). The outlook on both ratings is stable.

The ratings reflect MMIC's excellent risk-adjusted capitalization, recent favorable operating earnings, leadership position within the medical professional liability markets in which it operates and its high policyholder retention rate. The rating also recognizes the actions taken by management to restore and sustain operating profitability, including the implementation of indicated premium rate increases from 2001 through 2005, scheduled credit and discount decreases and continued efforts to maintain prudent loss reserves in response to previous adverse loss trends. Recent operating earnings also benefited from improved claim frequency and moderating claim severity. During the first quarter of 2006, policyholders' surplus was enhanced through the issuance of a $10.0 million, 30-year surplus note. Furthermore, the ratings reflect the cycle management programs and review processes put into place to reduce volatility and negative results should the medical liability markets deteriorate again.

These positive rating factors are offset in part by the inherent market risks associated with the medical professional liability insurance sector as they relate to price competition, legislative (tort) reform, loss cost trends and regulatory challenges. Furthermore, MMIC has exhibited some adverse variability in operating earnings, as highlighted by unfavorable underwriting results from 1999 through 2004. The rating outlook reflects the improvement in operating profitability and risk-adjusted capital and A.M. Best's expectation of sustained profitability and further stabilization of loss reserve development going forward, commensurate with its long term mission as a mutual insurer dedicated to the hospital and physician medical liability insurance market.

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.