A.M. Best Affirms Ratings of Commerce Group

OLDWICK, N.J. - A.M. Best Co. has affirmed the financial strength rating of A+ and the issuer credit ratings of “aa-” of Commerce Group. These ratings apply to the lead company, The Commerce Insurance Company, and its three inter-company pool members.

Concurrently, A.M. Best has affirmed the ICR of “a-” of Commerce’s publicly traded holding company, The Commerce Group, Inc. (NYSE:CGI). A.M. Best has also affirmed The Commerce Group Inc’s senior debt rating of “a-” of $300 million 5.95% senior unsecured notes due 2013. The outlook for all ratings is stable. All companies are domiciled in Webster, MA.

The ratings reflect Commerce’s solid capitalization, consistently strong operating performance and local market expertise. In addition, Commerce’s wholly-owned subsidiaries, Commerce West Insurance Company and American Commerce Insurance Company, provide geographic diversification and rate flexibility to the group. The ratings further acknowledge Commerce’s financial flexibility, which is derived from The Commerce Group, Inc.

These positive rating factors are partially offset by the group’s concentration of business in Massachusetts and limited product scope, which is focused on private passenger automobile.

Commerce’s operating performance is strong; however, its results remain influenced by the highly regulated Massachusetts personal automobile market and are susceptible to weather-related losses. As the state’s leading writer of personal lines business, Commerce benefits from its brand name recognition, adherence to strict underwriting fundamentals and in-depth understanding of the personal lines marketplace.

The FSR of A+ (Superior) and the ICRs of “aa-” have been affirmed for Commerce Group and its following inter-company pool members:

The Commerce Insurance Company
Citation Insurance Company (MA)
Commerce West Insurance Company
American Commerce Insurance Company
The ICR of “a-” has been affirmed for The Commerce Group, Inc.

The following debt rating has been affirmed:

The Commerce Group, Inc. --

-- “a-” on $300 million 5.95% senior unsecured notes, due 2013