A.M. Best Revises Under Review Status on Ratings of Commercial Travelers Mutual Insurance Company

  A.M. Best Revises Under Review Status on Ratings of Commercial Travelers
  Mutual Insurance Company

Business Wire

OLDWICK, N.J. -- April 19, 2013

A.M. Best Co. has revised the under review with positive implications to under
review with developing implications for the financial strength rating of B
(Fair) and issuer credit of “bb+” of Commercial Travelers Mutual Insurance
Company (Commercial Travelers) (Utica, NY).

The revised implications reflect the uncertainty of the regulatory and
legislative process for demutualizing Commercial Travelers, which would allow
full ownership by National Guardian Life Insurance Company (NGL) (Madison,
WI). The revised implications also reflect the poor operating results and low
risk-adjusted capitalization Commercial Travelers reported at year-end 2012.

To date, NGL has demonstrated support for Commercial Travelers, including the
purchase of a $5 million surplus note issued by the company in order to
bolster Commercial Travelers' weak risk-adjusted capital position. NGL also
has implemented a co-insurance agreement for 50% of Commercial Travelers'
student medical and accident business. These actions are reflected in its
year-end 2012 statutory financials. Additional cost-sharing initiatives also
are expected to allow Commercial Travelers to operate more efficiently going
forward.

A.M. Best will continue to monitor Commercial Travelers' operations and will
re-evaluate its ratings as it progresses through the regulatory review
process. The inability of NGL to successfully demutualize Commercial
Travelers, a perceived loss of support or continued deterioration in financial
results would be viewed negatively by A.M. Best, given Commercial Travelers’
weakened financial position reported at year-end 2012.

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. Best’s Credit Rating Methodology can be found at
www.ambest.com/ratings/methodology.

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.

Contact:

A.M. Best Co.
Louis Savarese, 908-439-2200, ext. 5168
Senior Financial Analyst
louis.savarese@ambest.com
or
Richard McMillan, 908-439-2200, ext. 5615
Managing Senior Financial Analyst
richard.micmillan@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com