Best Ratings Report

Editor's note: This information is courtesy of A.M. Best Co.
For further information, visit www.ambest.com/ratings.

A.M. Best Co. has downgraded thefinancial strength rating (FSR) to B+ (Good) from B++ (Good) and issuer credit rating (ICR) to ‘bbb-” from ‘bbb” of American Farmers & Ranchers Mutual Insurance Company (Oklahoma City, OK).

In addition, A.M. Best has assigned an FSR of B+ (Good) and ICRs of ‘bbb-” to American Farmers & Ranchers Group (Oklahoma City, OK) and American Farmers & Ranchers Insurance Company (formerly General Fire and Casualty Insurance Company) (Boise, ID) the recently acquired and fully reinsured subsidiary of American Farmers & Ranchers Mutual Insurance Company. All ratings have been placed under review with negative implications due to the uncertainty regarding the group’s future capital position and the challenges management will face integrating new business into the current operating structure.

These rating actions reflect the group’s weakened capital position from prior years as a result of costs associated with internal system improvements and the subsequent increase in the group’s non-admitted
assets, as well as severe storm activity that occurred in late 2007 and early 2008 in its operating territory.

Partially offsetting these negative rating factors are the group’s adequate level of risk-adjusted capital, generally conservative operating practices and established agency relationships in Oklahoma, where the majority of the group’s property business is generated. The group’s risk-adjusted capitalization is supported by a conservative investment portfolio and a comprehensive reinsurance program that mitigates the potential losses from the group’s significant catastrophe exposures.

The group will remain under review pending further discussions with management, filing of its second quarter 2008 statement and when premium and capital expectations are compiled for the new group.

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A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Good) and issuer
credit rating to “a-” from “bbb” of AHS Insurance Company Ltd. (AHS) (Grand Cayman, Cayman Islands). The outlook for both ratings is stable.

The ratings reflect AHS’ good capitalization, experienced management team and sound underwriting and risk management programs. Partially offsetting these positive rating factors is AHS’ limited business scope. Additional factors considered in these ratings include the explicit support of the captive’s parent, Atlantic Health System, Inc. and the strategic importance of AHS to the parent.

AHS’ strong risk management program uses a proactive approach for identifying, minimizing and managing claims. The program’s effectiveness is continuously monitored and adjustments are made when necessary. The ratings also consider the important role AHS serves in providing professional and general liability insurance to Atlantic Health System, Inc.

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A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of
“a-” of American Fuji Fire and Marine Insurance Company (American Fuji) (Long Grove, IL). The outlook for both ratings is stable.

The ratings reflect American Fuji’s low underwriting leverage and consistent after-tax profits. Historically, American Fuji has written commercial lines coverages for Japanese companies operating in the United States through fronting partners and, whenever possible, on a direct basis from July 2003 through June 2006. The low underwriting leverage is expected to be maintained over the near term as the company has decided to temporarily stop writing direct and assumed business and no dividends are anticipated to be paid to the parent. In the interim, American Fuji continues to actively explore new strategic business opportunities.

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A.M. Best Co. has upgraded the financial strength rating to B+ (Good) from B (Fair) and issuer credit rating to
“bbb-” from “bb” for National Independent Truckers Insurance Company, A RRG (NITIC) (Charleston, SC). The outlook for both ratings is stable.

The ratings reflect NITIC’s improved capitalization, decreased operational leverage measures, strong management team with expertise in this niche market and its strict underwriting and risk management guidelines.

Partially offsetting these positive rating factors is the company’s limited business profile. An additional offsetting factor is NITIC’s financial leverage position with a significant portion of the company’s surplus in
the form of a letter of credit.

Additional rating factors are NITIC’s fundamental business strategies, which include providing stable insurance coverage coupled with quality service for its members. These fundamentals are evidenced by high member retention and member loyalty. Each member makes an annual capital contribution based on the number of vehicles (power units) insured.

NITIC has very strict loss control and underwriting guidelines in place. The company uses a scheduled driver program and visually inspects each vehicle prior to issuing a policy. Extensive interviews are conducted with the drivers and motor vehicle records are reviewed prior to accepting new members.