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AM Best Revises Outlooks to Stable for Kentucky Employers' Mutual Insurance AuthorityAM Best has revised the outlooks to stable from negative and affirmed the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Rating of "a-" of Kentucky Employers' Mutual Insurance Authority (KEMI) (Lexington, KY). The Credit Ratings (ratings) reflect KEMI's balance sheet strength, which AM categorizes as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management. The outlook revisions to stable from negative reflect the company's improved capital adequacy, as measured by Best's Capital Adequacy Ratio (BCAR), categorized as strongest in recent periods. KEMI's improvement in its BCAR can be attributed directly to growth in the company's policyholder surplus, which has increased every year since 2016. Growth in surplus has been driven by improved operating results, which is demonstrated by the company reporting net income in each of the last four years. Furthermore, the company continues to undertake actions to stabilize reserve volatility on occupational disease exposures, by entering into an adverse development cover (ADC (News - Alert)) reinsurance agreement for accident years 2015-2019 to further protect capital. The ADC mitigates the risk of federal black lung claims, which may be brought under the Federal Coal Mine Health and Safety Act (FCMHSA). In its position as a writer of last resort in Kentucky, the company is exposed to occupational disease claims generally stemming from coal mining operations. Additionally, FCMHSA claims are sporadic as they tend to be closely crrelated to mine closures. AM Best will continue to monitor KEMI's loss reserves practices and other balance sheet factors as these exposures continue to evolve. This press release relates to Credit Ratings that have been published on AM Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best's Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper media use of Best's Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best's Credit Ratings and AM Best Rating Action Press Releases. AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com. Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.
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