A.M. Best Downgrades Ratings of First Jersey Casualty Insurance Company, Inc.

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OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has downgraded the financial strength rating to B- (Fair) from B+ (Good) and the issuer credit rating to “bb-” from “bbb-” of First Jersey Casualty Insurance Company, Inc. (FJCIC) (Clifton, NJ). The outlook for both ratings is negative.

The rating actions follow the negative outlook that was initially placed on the company’s ratings last year and reflect FJCIC’s continued underwriting and operating losses in 2010, the constant volatility around these results and the uncertainty related to future loss reserve development. FJCIC’s poor performance has been primarily driven by adverse loss reserve development on prior year claims, which caused the company’s surplus to contract by nearly 30% in 2010. The ratings also recognize FJCIC’s limited business profile and the uncertainty surrounding its future business endeavors as it decided to stop writing new direct business in late 2010.

These concerns are partially offset by FJCIC’s conservative underwriting leverage ratios via the implementation of substantial quota share reinsurance agreements with highly rated third-party reinsurers beginning in 2008. Management also has shown explicit support for the company via equity infusions in 2009 and in early 2011 to meet New Jersey’s minimum capital requirement.

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies” and “Understanding BCAR for Property/Casualty Insurers.” Methodologies 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.

CONTACT:

A.M. Best Co.
Greg Williams, 908-439-2200, ext. 5815
Senior Financial Analyst
greg.williams@ambest.com
or
Joseph Roethel, 908-439-2200, ext. 5630
Assistant Vice President
joseph.roethel@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