[February 22, 2013]

A.M. Best Assigns Ratings to Weston Insurance Company

A.M. Best Co. has assigned a financial strength rating of B (Fair) and an issuer credit rating of "bb" to Weston Insurance Company (Weston) (Tallahassee, FL). The outlook assigned to both ratings is stable.

The assigned ratings of Weston reflect its start-up status as a Florida wind-only writer of both personal and commercial property lines of business and corresponding risk concentration. In addition, the ratings recognize the company's high dependence on reinsurance, resulting in elevated credit risk exposure. Given the structure of Weston's initial take-out of policies from Citizens Property Insurance Corporation, during its initial five months of operation, 100% of the business written will be reinsured via a quota-share agreement. While subsequently Weston will migrate toward an extensive catastrophe reinsurance program, overall reinsurance dependence is expected to remain elevated in future years given the company's considerable exposure to potential catastrophic events in its operating territory. In addition, Weston faces certain execution risks, including the effectiveness of its highlyautomated underwriting selection process, the future availability and affordability of its planned reinsurance program and the implementation of adequate rate levels for the exposures being written.

Partially offsetting these negative rating factors are Weston's underwriting guidelines that target a specific market and its sophisticated rating segmentation process. In addition, the allocation of the company's invested assets is highly conservative, which reduces its investment risk. Furthermore, the company's current and projected risk-adjusted capitalization is adequate for its current rating level.

Negative rating actions would occur if Weston's planned financial results materially deviate from its projections, the reinsurance protection outlined does not materialize and/or the risk-adjusted capitalization were to decline below an acceptable level required by A.M. Best. In addition, material changes in the capital structure or management of the company also could result in negative rating actions.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Catastrophe Analysis in A.M. Ratings" and "Equity Credit for Hybrid Securities." Best's Credit Rating Methodology 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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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