A.M. Best Affirms Ratings of Safety National Group and Its Members

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings of “a” of Safety National Group, whose members include Safety National Casualty Corporation (SNCC) (St. Louis, MO) and its reinsured affiliate, Safety First Insurance Company (SFIC) (Chicago, IL). The outlook for all ratings is stable.

The affirmations reflect the group’s strong operating performance, solid capitalization achieved in part through explicit capital support from its parent, Delphi Financial Group, Inc. (Delphi Financial) [NYSE: DFG], and its established market presence within the excess workers’ compensation market.

Partially offsetting these positive rating factors are areas of ongoing, yet declining, adverse loss release development occurring on prior accident years and the impact of investment market fluctuations, which has hampered the group’s ability to internally generate capital. Despite these concerns, the outlook recognizes the group’s historically solid profitability levels, which outperform its peer composite, and A.M. Best’s expectation that SNCC should generate surplus growth through strong earnings over the near term.

The positive rating attributes reflect SNCC’s disciplined underwriting standards, service-oriented business approach and experienced management team. Furthermore, Delphi Financial is fully committed to supporting SNCC’s operations, while maintaining a moderate level of financial leverage with solid interest coverage ratios and historically excellent earnings produced by its insurance subsidiaries. The ratings also acknowledge the inherent synergies between Delphi Financial’s insurance entities, which include the sharing of management expertise, client bases, products, distribution and expenses.

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”; “Rating Members of Insurance Groups”; “A.M. Best’s Ratings & the Treatment of Debt”; “Natural Catastrophe Stress Test Methodology”; and “The Treatment of Terrorism Risk in the Rating Evaluation.” 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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