A.M. Best Affirms Ratings of First Colonial Insurance Company

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit rating of “a-” of First Colonial Insurance Company (First Colonial) (Jacksonville, FL). The outlook for both ratings is stable. First Colonial’s ultimate parent is The Allstate Corporation (Allstate) (Northbrook, IL) (NYSE: ALL).

The ratings are based on First Colonial’s solid risk-adjusted capitalization and explicit and implicit support provided by Allstate. As a subsidiary of Allstate, First Colonial benefits from the Allstate Insurance Group’s expansive market presence and brand name recognition. First Colonial’s capital position reflects its conservative investment risk profile and historical record of financial support from its ultimate parent. In addition, the company maintains modest underwriting leverage and an increased risk-adjusted capital position that is further enhanced by Allstate Insurance Company, which assumed a large book of auto roadside business ($69.0 million in premiums) that was previously assumed by First Colonial.

Partially offsetting these positive rating attributes is First Colonial’s underwriting volatility in recent years and challenges to sales growth. Although First Colonial’s underwriting results have shown improvement recently, economic factors and the impact on auto sales will continue to influence its underwriting performance.

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.” 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.

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