S&P cuts Penn National outlook to negative

Standard & Poor's said it revised its outlook on Pennsylvania National Mutual Casualty Insurance Co. and its affiliates, Penn National Security Insurance Co. and Founders Insurance Co., to negative from stable.

At the same time, the agency said it affirmed its BBB+ counterparty credit and financial strength ratings on these companies.

S&P said that the outlook revision reflects its belief that Penn National's underwriting results at year-end 2008 will be much weaker than in recent years, which would cause a sizable margin compression in 2008 and possibly in 2009.

The affirmation of the ratings reflects the company's good and sustainable competitive position in its regionally focused market, improved operating results in recent years and strong capital adequacy, the agency noted.

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