A.M. Best Downgrades Ratings of American Sterling Insurance Company

The ratings reflect American Sterling’s reduced level of risk-adjusted capitalization following its redefined business strategy, which has resulted in significant premium growth and the company’s product concentration of minimum limit liability on private passenger automobile insurance. The rating outlook reflects the ongoing challenges faced by management based on the need to balance the company’s underwriting plans against its risk-adjusted capital requirements.

American Sterling’s premium writings declined through 2005 due to its decision to run off its homeowners’ insurance and non-renew its private passenger automobile books of business in California. Beginning in 2006, the company successfully executed its plan to provide minimum limit liability insurance in Kansas, Nevada and Arizona, which caused a significant increase in underwriting leverage and an accompanying decline in risk-adjusted capitalization.

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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.

A.M. Best Company
Analysts
David Fidecaro, 908-439-2200, ext. 5420
david.fidecaro@ambest.com
or
Rick Decker, 908-439-2200, ext. 5423
rick.decker@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com