A.M. Best Downgrades Ratings of CAMICO Mutual Insurance

April 24, 2009

A.M. Best Co. has downgraded the financial strength rating of CAMICO Mutual Insurance Co. (CAMICO) based in Redwood
City, Calif., to B++ (Good) from A- (Excellent) and downgraded issuer credit rating to “bbb” from “a-.” The outlook for both ratings is stable.

The rating downgrades are the result of the deterioration in CAMICO’s
operating performance and capitalization in 2008, A.M. Best said. The company was negatively impacted by late developments in older year claims, as well as growth in indemnity payments on current losses and increased incurred but not reported reserve allocations. In addition, CAMICO incurred adverse investment returns with realized and unrealized losses that were consistent with the general investment marketplace during the year. Overall, the combination of these factors led the company to a 30 percent reduction in
policyholders’ surplus.

CAMICO’s ratings are supported by the company’s appropriate risk-adjusted capitalization for its rating level, management’s initiatives to improve underwriting profitability and reduce surplus volatility, a strong market position in accountant professional liability and consistently high policyholder retention rates. These factors are derived from the company’s extensive knowledge of the CPA profession and continued dedication to providing superior service to its customers. The stable outlook recognizes CAMICO’s level of capitalization and management’s commitment to return the company to underwriting profitability through rate increases and focusing on more profitable business segments, A.M. Best said.

For Best’s Ratings, an overview of the rating process and rating
methodologies, visit www.ambest.com/ratings.

Source: A.M. Best

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