A.M. Best Affirms Ratings of Allstate New Jersey Insurance Group Members

  A.M. Best Affirms Ratings of Allstate New Jersey Insurance Group Members

Business Wire

OLDWICK, N.J. -- February 14, 2013

A.M. Best Co. has affirmed the financial strength rating (FSR) of A-
(Excellent) and issuer credit ratings (ICR) of “a-” of the members of the
Allstate New Jersey Insurance Group (collectively referred to as Allstate New
Jersey)  (headquartered in Bridgewater, NJ). The outlook for all ratings is
stable. Allstate New Jersey’s ultimate parent is The Allstate Corporation
(Allstate) (Northbrook, IL) [NYSE: ALL]. (See below for a detailed listing of
the companies.)

The rating affirmations are based on Allstate New Jersey’s adequate
risk-adjusted capitalization and management’s local market knowledge. Allstate
New Jersey continues to undertake various actions to enhance its overall
operating results as the dedicated New Jersey property/casualty carrier for
Allstate. In addition, Allstate New Jersey’s operating performance has
generally benefited from its ability to quickly react to changing market
conditions. Furthermore, the group’s private passenger automobile margins have
improved due to recent rate activity, new business acceptance criteria and
renewal book actions. To better match price with risk, Allstate New Jersey’s
recent actions to improve its homeowners’ business have included rate
increases, targeted customer/property inspections and a reduction in mono-line
homeowners’ exposure. Additionally, the ratings acknowledge the operational
and financial benefits Allstate New Jersey receives as an affiliate of
Allstate Insurance Company, which is a market leader in the U.S. insurance

Allstate New Jersey’s positive rating factors are somewhat offset by its
geographic concentration within one state, which exposes its capitalization
and earnings to weather-related losses, competitive pressures and regulatory
mandates. This exposure has been evident in recent years as its homeowners and
auto physical damage lines of business were negatively impacted by net
catastrophe losses totaling approximately $260 million in 2012, primarily from
Superstorm Sandy, and $95 million in 2011, with an overall combined ratio
impact of approximately 22 points and 12 points, respectively. However, to
reduce surplus volatility, Allstate New Jersey has not paid dividends in
recent years and maintains a conservative investment portfolio.

While the outlook for the ratings of Allstate New Jersey is stable, the
ratings could be downgraded if underwriting performance and/or capital levels
fall materially short of A.M. Best’s expectations.

The FSR of A- (Excellent) and ICRs of “a-” have been affirmed for the
following members of Allstate New Jersey Insurance Group:

• Allstate New Jersey Insurance Company

• Allstate New Jersey Property and Casualty Insurance Company

• Encompass Insurance Company of New Jersey

• Encompass Property and Casualty Insurance Company of New Jersey

• Esurance Insurance Company of New Jersey

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 Ratings”; and “Rating Members of
Insurance Groups.” Best’s Credit Rating Methodology can be found at

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.
Michael T. Venezia, 908-439-2200, ext. 5034
Senior Financial Analyst
Gary Davis, 908-439-2200, ext. 5665
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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