A.M. Best Affirms Ratings of Philmont Insurance Company

  A.M. Best Affirms Ratings of Philmont Insurance Company

Business Wire

OLDWICK, N.J. -- June 4, 2014

A.M. Best has affirmed the financial strength rating of B++ (Good) and the
issuer credit rating of “bbb+” of Philmont Insurance Company (Philmont)
(Burlington, VT). The outlook for both ratings is stable.

The ratings and outlook reflect Philmont’s strong capitalization and
conservative operating strategy. The ratings also consider the company’s
critical role and favorable profile as part of the Toll Brothers, Inc. [NYSE:
TOL] organization, as well as its strong operating performance, providing
insurance coverage to various projects and subsidiaries of Toll Brothers, Inc.
for certain liability risks.

Partially offsetting these positive rating factors are Philmont’s relatively
large reserves and its incurred but not reported reserves. Nevertheless, A.M.
Best recognizes the strong liquidity position of Philmont and the substantial
financial resources of the Toll Brothers, Inc. organization.

A.M. Best views Philmont’s management and corporate strategy as strengthening
factors for the ratings, given the company’s conservative underwriting,
operational goals and transparency. A.M. Best views Philmont’s enterprise risk
management practices as strong given their impact on the company’s
conservative risk culture, defined risk controls and the optimizing of its
capital and surplus. Other factors A.M. Best considered in the affirmation of
the ratings include, but are not limited to, Philmont’s diversification in its
line of business and geography, as well as the support and commitment of its
parent and its own mission.

A.M. Best expects Philmont’s future operating performance to be stable but
strong, and the stable earnings profile should further support its growth and
business writing, which is consistent with its capital and surplus position.

Philmont’s ratings and outlook are not expected to be upgraded within the next
12-24 months as its operating performance and capital position have already
been considered in the ratings process. A.M. Best could downgrade the
company’s ratings and/or revise the outlook if its Best’s Capital Adequacy
Ratio (BCAR) score declines, operating performance and risk profile
deteriorate, insured losses deplete capital, significant changes and turnover
occur in its management team and/or risk management controls and tolerances,
or Toll Brothers, Inc.’s ratings deteriorate.

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

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 © 2014 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.


A.M. Best Company
Fred Eslami, 908-439-2200, ext. 5406
Senior Financial Analyst
Steven Chirico, CPA, 908-439-2200, ext. 5087
Assistant Vice President
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
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