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A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of “a” of the property/casualty subsidiaries of Eastern Insurance Holdings, Inc. (EIHI) [NASDAQ: EIHI], which consist of Eastern Alliance Insurance Company, Allied Eastern Indemnity Company, Eastern Advantage Assurance Company and Employers Security Insurance Company (Indianapolis, IN) (collectedly referred to as Eastern Alliance Insurance Group [EAIG]). EAIG operates under an intercompany pooling agreement. Concurrently, A.M. Best has affirmed the ICR of “bbb” of EIHI. The outlook for all ratings is stable. All companies are domiciled in Lancaster, PA, unless otherwise specified. The ratings recognize EAIG’s strong underwriting and overall operating performance, excellent risk-adjusted capitalization, prudent reserving practices and the financial flexibility afforded it by its publicly traded, debt free parent, EIHI. The cultivation of a loyal agency base within preferred territories has produced profitable growth as evidenced by the group’s five-year average combined and operating ratios, which outperformed the workers’ compensation composite by a significant margin. EAIG’s strong underwriting performance reflects its commitment to maintain sound pricing, a proactive return to wellness program and utilization of “compromise and release” agreements. This approach has allowed EAIG to close claims more quickly and at a lower average cost than the typical workers’ compensation writer. Partially offsetting these positive rating factors are EAIG’s product concentration as a monoline workers’ compensation writer, which potentially exposes it to increased risk of regulatory or legislative changes, below-average investment ratio, as well as the execution risks associated with ongoing state expansion initiatives. Despite these concerns, the outlook acknowledges EAIG’s prudent operating strategy, focused underwriting initiatives and aggressive claims management, which have contributed to strong earnings over the long term. While A.M. Best believes the ratings for EAIG are appropriately positioned at their present level, future positive rating actions may result from its continued strong underwriting and operating performance. Factors that could lead to negative rating actions include a lack of underwriting discipline or unsatisfactory execution of ongoing diversification strategies leading to the group’s underwriting and overall profitability underperforming its peers for a sustained period or should there be a material decline in its risk-adjusted capitalization.