Auto-Owners Insurance Group GetsA++ Rating

OLDWICK, NJ--June 9, 2011: A.M. Best Co. has affirmed the financial strength rating (FSR) of A++ (Superior) and issuer credit ratings (ICR) of "aa+" of Auto-Owners Insurance Group (AOIG) and its members. AOIG is comprised of five property/casualty companies led by Auto-Owners Insurance Company (Auto-Owners) and its four wholly owned subsidiaries.

Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and ICR of "aa-" of Auto-Owners Life Insurance Company (AOLIC), a wholly owned subsidiary of Auto-Owners. The outlook for all ratings is stable. All companies named above are domiciled in Lansing, MI. (See below for a detailed listing of the companies.)

The ratings reflect AOIG's superior capitalization, trend of solid operating income, experienced management team, commercial and personal product offerings and long-standing agency relationships. In addition, the group possesses strong risk management techniques and a well-established market position.  

These positive factors are partially offset by AOIG's modest premium growth and trend of underwriting losses over the recent five-year period. The group has significant premium volume in Michigan, which exposes it to challenging economic, legislative and regulatory environments. Additionally, as a member of the Michigan Catastrophic Claims Association, AOIG is somewhat exposed to rising retentions and credit risk of collecting on its largest reinsurance recoverable.

Over the recent three-year period, Auto-Owners reported underwriting losses primarily due to above average weather-related losses emanating from Midwestern tornado/hail, winter storms and the inland effects from Hurricane Ike.

The ratings of Auto-Owners Life reflect its integral role as the life member of AOIG, favorable level of risk-adjusted capitalization, recent trends of increased life and annuity premiums and consistent trend of operating income, particularly in its ordinary life line of business.  

Partially offsetting rating factors include Auto-Owners Life's small contribution to the group, large exposure to interest sensitive fixed annuities and its limited business profile, which is highly dependent on the parent company's property/casualty business.

The FSR of A++ (Superior) and ICR of "aa+" have been affirmed for Auto-Owners Insurance Group and its following members:

• Auto-Owners Insurance Company
• Home-Owners Insurance Company
• Owners Insurance Company
• Property-Owners Insurance Company
• Southern-Owners Insurance Company

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"; "Understanding BCAR for Property/Casualty Insurers"; and "Rating Members of Insurance Groups."

Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.