[December 18, 2014]

A.M. Best Affirms Ratings of ACMAT Corporation and ACSTAR Insurance Company

A.M. Best has affirmed the issuer credit rating (ICR) of "bbb+" of ACMAT Corporation (ACMAT) (Farmington, CT)(Pink Sheets:ACMTA). A.M. Best also has affirmed the financial strength rating of A (Excellent) and the ICR of "a+" of ACMAT's wholly owned subsidiary, ACSTAR Insurance Company (ACSTAR) (Chicago, IL). The outlook for all ratings is stable.

The rating affirmations reflect ACSTAR's strong risk-adjusted capitalization, sustained underwriting and operating income through the construction cycle, conservative business philosophy and proven risk management practices. Underwriting income has narrowed in recent years as the decline in ACSTAR's premium base has outpaced the decline in the company's operating expenses. Partially offsetting these positive rating factors are ACSTAR's limited product diversification as a monoline provider of surety bonds, the effects of a still sluggish public construction sector on premiums, and the issuance of dividends primarily to service the debt and stock repurchase program of ACMAT.

A.M. Best believes upward movement in the ratings at this point is unlikely. Negative rating actions could occur if risk-adjuted capital and/or operating performance fall markedly short of A.M. Best's expectations.

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.

Key insurance criteria reports utilized:

• Insurance Holding Company and Debt Ratings
• Rating Surety Companies
• Risk Management and the Rating Process for Insurance Companies
• Understanding BCAR for Property/Casualty Insurers

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.

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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