A.M. Best Affirms Ratings of LocalTapiola General Mutual Insurance Company

A.M. Best Europe - Rating Services Limited has affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a" of LocalTapiola General Mutual Insurance Company (LocalTapiola) (Finland). The outlook for both ratings remains stable.

The ratings reflect LocalTapiola's strong consolidated risk-adjusted capitalisation, excellent business profile as one of the leading non-life insurers in Finland and improving technical performance.

LocalTapiola's consolidated risk-adjusted capitalisation is expected to remain strong, enhanced by a substantial claims equalisation reserve. Based on interim results, the company is on course to report a combined ratio below 100% in its first full year of operation, precipitated by lower major loss activity and a reserve release of EUR 61.0 million, which resulted from a change in the calculation method of its technical provisions. Premium growth in 2013 is likely to be modest, and as such, LocalTapiola is expected to report consolidated net premium income (including the regional mutuals) of approximately EUR 1.1 billion.

The above factors are partially offset by LocalTapiola's limited financial flexibility as a mutual insurer. Given the concentrated and competitive nature of the Finnish market, future growth may prove challenging. However, LocalTapiola benefits from its excellent business profile, extensive distribution network and position as a mutual insurer, which enables it to offer competitive premiums to its member-insureds. LocalTapiola is one of the largest non-life insurers in Finland, as measured by gross premium income, with an approximate market share of 27% (including the regional mutuals).

Positive rating actions are unlikely in the medium term. Negative rating actions could occur if there were a notable deterioration in LocalTapiola's consolidated risk-adjusted capitalisation and/or a material fall in technical performance.

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 www.ambest.com/ratings/methodology.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

A.M. Best Europe - Rating Services Limited is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best Company
Carlos Wong-Fupuy, +(44) 20 7397 0287
Senior Director, Analytics
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Stefan Holzberger, +(44) 20 7397 0288
Managing Director, Analytics
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Rachelle Morrow, [phone], ext. 5378
Senior Manager, Public Relations
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Jim Peavy, [phone], ext. 5644
Assistant Vice President, Public Relations
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