A.M. Best Affirms Ratings of United States Liability Insurance Company and Its Subsidiaries

A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) and issuer credit ratings of “aa+” of United States Liability Insurance Company (US Liability) (Wayne, PA) and its subsidiaries, Mount Vernon Fire Insurance Company (Wayne, PA) and U.S. Underwriters Insurance Company (Bismarck, ND). The outlook for all ratings is stable.

The ratings reflect US Liability’s strong capitalization, outstanding long-term operating profitability and the advantages derived from management’s strict underwriting and price discipline. US Liability also benefits from the operating flexibility afforded through its use of admitted and non-admitted paper, its continued focus on service and its effective sales and marketing strategy. The ratings further recognize management’s conservative loss reserving strategy as well as its prudent catastrophe management philosophy.

A.M. Best also recognizes the implicit and explicit support provided by its ultimate parent, Berkshire Hathaway Inc. (Berkshire) [NYSE: BRK.A and BRK.B], and the added financial flexibility afforded by a Berkshire subsidiary as demonstrated in 2007.

As of January 1, 2007, each member of the group entered into a 50% loss portfolio transfer agreement and a 50% quota share reinsurance agreement with an affiliate, National Indemnity Company, an indirectly owned subsidiary of Berkshire. The effect of these transactions led to a substantial reduction in US Liability’s underwriting leverage, which facilitated an extraordinary dividend taken that year.

Partially offsetting these positive rating factors is US Liability’s high investment leverage, which includes asset concentration risks associated with a limited number of common stock holdings and multiple notes held by one issuer.

Downward rating pressure could materialize if US Liability’s risk-adjusted capital and/or operating performance fall markedly short of A.M. Best’s expectations, including a significant deterioration in loss trends and/or any material disruptions to its present business strategy.

The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Catastrophe Analysis in A.M. Best’s Ratings”; and “Rating Members of Insurance Groups.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
Greg Williams, 908-439-2200, ext. 5815
Managing Senior Financial Analyst

Joseph Roethel, 908-439-2200, ext. 5630
Assistant Vice President

Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations

Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations

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