2009-11-10 22:32:04 -

A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and issuer credit rating to “a-” from “a” of Lawyers Mutual Liability Insurance Company of North Carolina (LML) (Cary, NC). The outlook for both ratings has been revised to stable from negative.

These rating actions were taken due to the deterioration in LML’s operating performance during

its most recent five-year period. The company was negatively impacted by a significant increase in claims frequency from late 2007 into 2009, driven by losses within several areas of legal practice, particularly real estate. LML has posted net underwriting losses in four of the past five years. Adverse reserve development coupled with reactive premium rate management has negatively impacted the company’s current operations. Partially offsetting these rating factors has been the company’s favorable investment results helping to generate a cumulative net income of $3.7 million over the last five years.

LML’s ratings are supported by continuing strong risk-adjusted capitalization for its rating level, a dominant market position in lawyer professional liability in North Carolina and its consistently high policyholder retention rates. These factors are derived from the company’s extensive knowledge of the legal profession and continued dedication to providing superior service to its customers.

The stable outlook recognizes LML’s capitalization and management’s commitment to return the company to underwriting profitability through appropriate rating actions.

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

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology : .



Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com : .



A.M. Best CompanyAnalysts:Robert

Raber, 908-439-2200, ext. 5696 robert.raber@ambest.com : mailto:robert.raber@ambest.com orHenry
Witmer, 908-439-2200, ext. 5097 henry.witmer@ambest.com : mailto:henry.witmer@ambest.com orPublic
Relations:Jim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com : mailto:james.peavy@ambest.com orRachelle
Morrow, 908-439-2200, ext. 5378 rachelle.morrow@ambest.com : mailto:rachelle.morrow@ambest.com