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A.M. Best Upgrades Ratings of Members of Dakota Group
[June 12, 2014]

A.M. Best Upgrades Ratings of Members of Dakota Group

OLDWICK, N.J. --(Business Wire)--

A.M. Best has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and the issuer credit ratings to "a-" from "bbb+" of the members of Dakota Group (Dakota). Dakota consists of Dakota Truck Underwriters and First Dakota Indemnity Company. The outlook for all ratings has been revised to stable from positive. All companies are domiciled in Sioux Falls, SD.

The rating actions reflect Dakota's strong risk-adjusted capitalization, historically positive operating results and specialized market presence as a niche workers' compensation writer in the upper Midwestern states. Dakota's relatively strong after-tax returns have led to decreased underwriting leverage in recent years, which is reflected in a stronger level of risk-adjusted capitalization. In addition, underwriting leverage has been favorably impacted by a 25% quota share agreement entered into on May 1, 2013, covering workers' compensatio exposures, except those subject to a large deductible. The quota share agreement was subsequently increased to 30% effective Jan. 1, 2014.

Somewhat offsetting these positive factors are Dakota's concentration of business in the workers' compensation line of business, moderate adverse prior year loss reserve development in the past three years and exposure to underpriced business assumed from the South Dakota assigned risk pool.

While Dakota is well-positioned at its current rating level, negative rating actions could result if operating performance falls markedly short of A.M. Best's expectation or if risk-adjusted capitalization declines significantly.

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. Best's Credit Rating Methodology can be found at

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit

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