PSIC’s ratings recognize its excellent risk-adjusted capitalization, operational and financial support of affiliates, experienced management team and its targeted earnings and capital accumulation projections set forth by management. In addition, the ratings consider the mitigation of underwriting risks through substantial reinsurance programs.These positive rating factors are partially offset by the significant challenges and uncertainties associated with PSIC’s newly formed business operations, including the successful execution of its operating plans in highly competitive property/casualty markets, the property catastrophe exposure of its dominant Florida BOP operations and the potential variability in profitability of its more limited MPL E&O insurance. Furthermore, the production of PSIC’s Florida BOP business is concentrated with one managing general agent. Explicit support from PSIC’s affiliates includes a financial guarantee of all its liabilities and/or obligations and stop loss coverage being provided by its financially strong parent, PIC. Baldwin & Lyons, Inc. also is financially strong with very low financial leverage and solid coverage ratios, as well as access to capital markets. A.M. Best will continue to closely monitor PSIC’s progress to ensure targeted results are attained, and capital and surplus are in compliance with A.M. Best’s standards relative to its ratings. 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”; “Catastrophe Analysis in A.M. Best’s Ratings”; Natural Catastrophe Stress Test Methodology”; “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. Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.