A.M. Best Affirms Ratings of Central States Indemnity Co. of Omaha

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and issuer credit rating of "aa-" of Central States Indemnity Co. of Omaha (CSI) (Omaha, NE). The outlook for both ratings is stable.

The ratings reflect CSI's excellent risk-adjusted capitalization, consistently profitable operating performance, favorable balance sheet liquidity and extremely conservative underwriting leverage, as well as the benefits made available through its ultimate parent, Berkshire Hathaway, Inc. (NYSE: BRK A and BRK B). CSI is a specialty insurance company that provides payment protection programs to some of the largest financial organizations in the country, agricultural equipment insurance, pet health insurance and Medicare supplement insurance.


These positive rating factors are offset by the significant reduction in CSI's credit insurance book of business, which has resulted from the banking industry's switch to non-insurance debt protection products in lieu of traditional credit insurance. CSI has migrated to other products and services and today writes more non-credit insurance premiums compared to its long-standing credit insurance business; however, the company's total direct written premiums have declined by approximately 10% over the past five years. Additional offsetting factors include CSI's elevated investment leverage and near-term execution risk and strain to earnings brought on by the up-front costs and investment associated with new lines of business.

A.M. Best believes CSI is well positioned at its current rating level. However, negative rating actions could occur if there is a decline in underwriting and operating performance, if there is a considerable deterioration in risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio, or if A.M. Best determines that the company's strategic importance to its parent no longer warrants rating enhancement.

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.



A.M. Best Co.
Robert Valenta, 908-439-2200, ext. 5291
Senior Financial Analyst
robert.valenta@ambest.com
or
Gerard Altonji, 908-439-2200, ext. 5626
Assistant Vice President
gerard.altonji@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

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