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A.M. Best Affirms Ratings of Fremont Insurance Company and Fremont Michigan InsuraCorp, Inc.

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^{Published in Business and Finance on Friday, November 19th 2010 at 7:56 GMT by Market Wire}  

OLDWICK, N.J.--([ BUSINESS WIRE ])--A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating (ICR) of aa-a of Fremont Insurance Company (Fremont). A.M. Best also has affirmed the ICR of abbb-a of its parent holding company, Fremont Michigan InsuraCorp, Inc. (OTC BB: FMMH). The outlook for all ratings is stable. Both companies are domiciled in Fremont, MI.

"Catastrophe Risk Management Incorporated Within the Rating Analysis."

The ratings and outlook reflect Fremonta™s solid risk-adjusted capitalization, favorable operating earnings and its well-established presence as a writer of personal lines insurance in Michigan. The companya™s capital position reflects its moderate underwriting leverage, conservative investment risk profile and favorable loss reserve development. Fremonta™s operating earnings have been driven by strong underwriting results and solid investment income over the previous five-year period. The favorable operating earnings were due in part to management initiatives such as terminating unprofitable agencies, increased insurance-to-value, rate adjustments, enforcing stricter underwriting guidelines, insurance scoring and diversifying its spread of risk within Michigan.

These positive rating factors are partially offset by the risks inherent in Fremonta™s geographic concentration within Michigan, which may subject it to weather-related loss exposure, potentially adverse legal and regulatory conditions, as well as economic and competitive market pressures. Most recently, Fremonta™s pre-tax operating earnings have declined due to a deterioration in underwriting results that was driven by a higher loss and loss adjustment expense ratio across all lines of business, coupled with lower net investment income. The deterioration in loss experience was attributable to an increase in weather-related claims, higher losses in personal automobile and increased fire losses.

The principal methodology used in determining these ratings is Besta™s Credit Rating Methodology --[ Global Life and Non-Life Insurance Edition ], which provides a comprehensive explanation of A.M. Besta™s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: aRisk Management and the Rating Process for Insurance Companiesa; aUnderstanding BCAR for Property/Casualty Insurersa; aNatural Catastrophe Stress Test Methodologya; and aCatastrophe Risk Management Incorporated Within the Rating Analysis.a 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 ].

Copyright © 2010 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.