A.M. Best Affirms Ratings of United States Liability Insurance Group and Its Members

A.M. Best Co. has affirmed the financial strength rating of A++ (Superior) and issuer credit rating of “aa+” of United States Liability Insurance Group (US Liability) (Wayne, PA) and its members. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The ratings reflect US Liability’s strong capitalization, outstanding long-term operating profitability and the advantages derived from management’s proven underwriting discipline. A.M. Best also recognizes the implicit and explicit financial support provided by its ultimate parent, Berkshire Hathaway Inc. (NYSE: BRK.A and BRK.B) and the added financial flexibility afforded by its (re)insurance affiliate as demonstrated in 2007.

As of January 1, 2007, each member of the group entered into a 50% loss portfolio transfer agreement and a 50% quota share reinsurance agreement with an affiliate, National Indemnity Company (Omaha, NE), an indirectly owned subsidiary of Berkshire Hathaway Inc. The effect of these transactions led to a substantial reduction in the group’s underwriting leverage, which then helped to facilitate the extraordinary stockholder dividend taken that year.

Offsetting these positive rating factors is US Liability’s high investment leverage exhibited by the level of unrealized losses reported in 2008 and first quarter 2009 due to the global financial crisis, and the group’s dependence on a single method of distribution source, the professional wholesaler. Notwithstanding, the rating outlook reflects the group’s strong risk-adjusted capitalization, outstanding historic operating profitability and favorable near-term and long-term prospects.

The FSR of A++ (Superior) and ICRs of “aa+” have been affirmed for United States Liability Insurance Group and its following members:

• Mount Vernon Fire Insurance Company
• U.S. Underwriters Insurance Company
• United States Liability Insurance Company

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.