A.M. Best Affirms Ratings of Infinity Property & Casualty Group, Its Members and Infinity Property & Casualty Corporation

A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a” of Infinity Property & Casualty Group (Infinity P/C) and its operating members. Concurrently, A.M. Best has affirmed the ICR of "bbb” and debt rating of "bbb” on $195 million 5.50% senior unsecured notes, due 2014 issued by Infinity Property & Casualty Corporation (IPCC) [NASDAQ: IPCC]. The outlook for all ratings is stable. The above named companies are headquartered in Birmingham, AL. (See below for a detailed listing of the companies.)

The rating affirmations of Infinity P/C reflect its excellent risk-adjusted capitalization, consistently favorable operating performance and strong non-standard automobile market presence. Infinity P/C’s favorable underwriting profitability is attributed to management’s product line expertise, local market knowledge and utilization of sophisticated technologies within the pricing, risk selection and claims handling process. Infinity P/C ranks among the leading non-standard automobile writers in the United States. In addition, the group’s ratings recognize the financial flexibility provided by IPCC, which has modest financial leverage measures and favorable fixed interest coverage ratios.

Partially offsetting these factors are Infinity P/C’s limited business profile, with policies comprised predominantly of non-standard auto and approximately two-thirds of the direct written premium concentrated in two key states. As a result, earnings are susceptible to increased competition in the non-standard auto segment and changes in the regulatory, judicial and legislative environment in its largest states. In addition, continued dividend distributions to IPCC limit Infinity P/C’s ability to increase its surplus position. However, Infinity P/C has maintained solid earnings through rate adequacy and underwriting discipline to support the dividend expectations.

The FSR of A (Excellent) and ICR of "a” have been affirmed for Infinity Property & Casualty Group and its following operating members:

• Infinity Assurance Insurance Company
• Infinity Auto Insurance Company
• Infinity Casualty Insurance Company
• Infinity General Insurance Company
• Infinity Indemnity Insurance Company
• Infinity Insurance Company
• Hillstar Insurance Company
• Infinity Preferred Insurance Company
• Infinity Premier Insurance Company
• Infinity Reserve Insurance Company
• Infinity Safeguard Insurance Company
• Infinity Security Insurance Company
• Infinity Select Insurance Company
• Infinity Specialty Insurance Company
• Infinity Standard Insurance Company
• Infinity County Mutual Insurance Company

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s 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”; "Natural Catastrophe Stress Test Methodology”; "Catastrophe Risk Management Incorporated Within the Rating Analysis”; "Rating Members of Insurance Groups”; and "A.M. Best’s Ratings & the Treatment of Debt.” 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.

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