A.M. Best Revises Outlook to Negative for Southern Trust Insurance Company

A.M. Best Co. has revised the outlook to negative from stable
and affirmed the financial strength rating of A (Excellent) and
issuer credit rating of a of Southern Trust Insurance Company
(Southern Trust) (Macon, GA). The revision of the outlook to
negative reflects Southern Trusts negative underwriting income in
recent years, driven not only by significant weather-related losses
but also an elevated expense ratio that on a five-year basis,
considerably exceeds the private passenger auto and homeowners
composite. In addition, Southern Trusts business concentration
creates exposure to ongoing weather-related losses. In spite of the
negative underwriting results, Southern Trust maintains strong
risk-adjusted capitalization, which is derived from its
conservative operating strategies, favorable reserve development
and conservative investment risk. In addition, Southern Trust
maintains long-standing agency relationships and possesses local
market expertise in its leading state of Georgia. Future rating
downgrades could result if there is continued deterioration in
underwriting performance or a significant erosion of Southern
Trusts capital base. Removal of the negative outlook would include,
but is not limited to, several years of improved underwriting
performance while maintaining strong risk-adjusted capitalization.
The principal methodology used in determining these ratings is
Bests Credit Rating Methodology -- Global Life and Non-Life
Insurance Edition, which provides a comprehensive explanation of
A.M. Bests 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 Catastrophe
Analysis in A.M. Best Ratings. 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. Copyright 2011 by A.M. Best Company, Inc. ALL
RIGHTS RESERVED.