A.M. Best Upgrades Credit Ratings of Lawyers Mutual Liability Insurance Company of North Carolina

OLDWICK, N.J.–(BUSINESS WIRE)–A.M. Best has upgraded the Financial Strength Rating to A
(Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating
to “a” from “a-“ of Lawyers Mutual Liability Insurance Company of
North Carolina
(LML) (Cary, NC). The outlooks of these Credit
Ratings (ratings) have been revised to stable from positive.

The rating upgrades reflect LML’s solid operating performance, which
outperformed its peers and the composite average. The ratings also
reflect LML’s strong and highly liquid balance sheet, favorable loss
reserve development, solid enterprise risk management framework and
management’s long-standing expertise in the North Carolina legal
professional liability sector.

The company’s focus is on small to medium size firms and sole
practitioners and its mission to be a stable market for lawyers in North
Carolina while actively serving the legal community. The ratings also
consider the diversification benefit derived from the various areas of
practice the company insures and its ability to adjust its exposure in
each of these areas based on overall performance. Partially offsetting
these positive rating factors is the company’s limited business profile,
writing one line of business, which subjects it to a higher degree of
risk from fluctuations in the underwriting cycle, economic conditions in
the state, changes in the housing market and changes in North Carolina’s
regulatory, legislative and judicial environments.

The balance sheet is strong and has gained strength in recent years due
to organic surplus growth, lower loss reserves and modest premium risk
growth. Risk-adjusted capitalization is highly supportive of the
ratings. Underwriting leverage ratios are also favorable and showing
improvement. The balance sheet is highly liquid with a good mix of
highly rated securities in the fixed income portfolio supplemented by
non-affiliated common stock and affiliated investments. Reserves have
declined in recent years as the result of the company’s focus on closing
claims more quickly and lower new claim counts resulting from lower
claim frequency and greater attention on claims and reserving.

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
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
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Best’s Credit Ratings
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