Market Overview

A.M. Best Upgrades Issuer Credit Ratings of Members of MAG Mutual Group


A.M. Best has upgraded the Long-Term Issuer Credit Rating to "a+"
from "a" and affirmed the Financial Strength Rating of A (Excellent) of MAG
Mutual Insurance Company
(Atlanta, GA) and Professional Security
Insurance Company
(Scottsdale, AZ), collectively known as MAG
Mutual Group
. The outlook of these Credit Ratings (ratings) is

The ratings reflect the MAG Mutual Group's balance sheet strength, which
A.M. Best categorizes as strongest, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management (ERM).

The balance sheet strength is supported by strongest risk-adjusted
capitalization, as measured by Best's Capital Adequacy Ratio (BCAR),
historically favorable loss reserve development, modest financial
leverage and history of organic surplus growth. In addition, liquidity
is adequate and supported by an invested asset base that predominantly
consists of high-quality fixed-income securities.

A.M. Best considers MAG Mutual Group's operating performance to be
adequate when measured on a pre-dividend combined ratio and operating
ratio basis. However, significant challenges exist due to changes in
U.S. health care and its effects on this organization's mix of business
and earnings prospects. Despite the challenges, the group produced
pre-tax operating profits in each of the past five years, as investment
income supported policyholder dividends.

The business profile assessment reflects the group's standing as a
regional medical professional liability (MPL) insurance provider
operating primarily in the Southeastern United States. Although the
group remains heavily concentrated in the MPL sector, management's
diversification efforts in recent years have allowed the group to take
advantage of new business opportunities in an otherwise challenging
business environment. Nevertheless, the concentration of risk in MPL
insurance exposes the group to changes in the U.S. health care system,
judicial climate, regulatory environment and state tort reform laws.
With regard to its ERM, the group has a framework to identify and manage
various different types of risks, a process A.M. Best views as
appropriate for its risk profile.

Further positive rating action could result if the group's underwriting
results were to improve relative to peers while maintaining a balance
sheet strength assessment at the strongest level as the group manages
through the current challenging market cycle. Negative rating action
could result if material adverse development were to emerge that
negatively impacts underwriting profitability and leads to deteriorating
operating performance.

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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