A.M. Best Upgrades Ratings of GUARD Insurance Group Members

  A.M. Best Upgrades Ratings of GUARD Insurance Group Members

Business Wire

OLDWICK, N.J. -- January 24, 2013

A.M. Best Co. has upgraded the financial strength rating to A+ (Superior) from
A- (Excellent) and issuer credit ratings to “aa-” from “a-” of NorGUARD
Insurance Company, AmGUARD Insurance Company, EastGUARD Insurance Company and
WestGUARD Insurance Company, which operate under an intercompany pooling
agreement. All ratings have been removed from under review with positive
implications and assigned a stable outlook. These companies are members of
GUARD Insurance Group (GUARD) and are domiciled in Wilkes-Barre, PA.

The ratings reflect GUARD’s solid capitalization, favorable operating
profitability achieved through disciplined underwriting initiatives, as well
as the cautious manner in which initial claim reserves are established, which
has resulted in favorable reserve development in recent years. The ratings
also acknowledge the implicit and explicit financial support provided by
GUARD's new ultimate parent, Berkshire Hathaway Inc. (Berkshire) [NYSE: BRK.A
and BRK.B], and Berkshire subsidiary, National Indemnity Company (NICO),
including significant reinsurance transactions. In addition to Berkshire’s
track record of supporting its member companies, these transactions
demonstrate the explicit commitment provided by Berkshire, for which GUARD
members receive rating enhancement.

Partially offsetting these positive rating factors are the group's
above-average growth over the past several years and the inherent risks
associated with integrating new product lines and expansion into new states,
which is compounded by the current soft underwriting cycle and weakened
macroeconomic conditions, in addition to a degree of concentration in a couple
of significant production sources. Also, the group's net investment ratio is
below the workers' compensation composite and comparably rated peers. Despite
these concerns, the outlook reflects GUARD members’ enhanced financial
flexibility provided by Berkshire, strong balance sheet and historical
underwriting profitability.

A.M. Best believes GUARD members are well positioned at their current rating
level. However, their ratings/outlook could come under pressure should soft
market conditions and a lack of underwriting discipline in GUARD’s product
lines and expansion initiatives result in a decline in underwriting and
overall profitability to levels underperforming its peers or should Berkshire
fail to provide adequate financial and operational support.

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”; “Catastrophe Analysis in A.M. Best Ratings”;
“Rating Members of Insurance Groups”; “The Treatment of Terrorism Risk in the
Rating Evaluation”; and “Understanding BCAR for Property/Casualty Insurers.”
Best’s Credit 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Co.
W. Dolson Smith, CFA, 908-439-2200, ext. 5379
Senior Financial Analyst
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Michael J. Lagomarsino, CFA, 908-439-2200, ext. 5810
Assistant Vice President
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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