A.M. Best Co. recently released ratings updates. The following are some of the most prominent:American Family Insurance Group A.M. Best revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of “A” (excellent) and issuer credit ratings (ICR) of “a” for American Family Insurance Group, which includes American Family Mutual Insurance Co. and its three reinsured subsidiaries.Additionally, A.M. Best revised the outlook to negative from stable Link Textand affirmed the FSR of “A” (excellent) and ICR of “a” of American Family Insurance Group’s life/health member, American Family Life Insurance Co. The negative outlook, the ratings firm says, reflects its trend of weak operating results, the recent decline in its risk-adjusted capitalization, continued exposure to catastrophic losses and the ongoing competitive market conditions in the personal and commercial marketplace.BancInsure Inc. A.M. Best placed the financial strength rating of “A-“ (excellent) and issuer credit rating of “a-” of BancInsure Inc. under review with negative implications. These rating actions are due in part to a 36% decline in BancInsure’s surplus as of Dec. 31, 2008 compared to year-end Dec. 31, 2007.The rating actions follow BancInsure’s net loss for 2008 and unrealized investment losses, which, combined, produced a $16.1 million erosion in shareholders’ equity. A.M. Best also is concerned that the continuing turmoil in the financial markets could further erode BancInsure’s capital position and negatively impact its earnings in 2009. The “under review” status will remain in place until a full formal evaluation and analysis of BancInsure’s risk-adjusted capitalization and further discussions are held to determine whether it has sufficient cushion to weather more negative effects of the continuing turmoil in the financial markets, as well as any other unexpected events.Rodney Sargent, president and CEO of BancInsure, issued a statement in response to the rating. “Last year was challenging for the entire financial services sector—banks and insurance carriers taking an enormous hit.” The company experienced losses that were driven by the unprecedented global economic crisis and an increased severity of claims in the Bond and D&O products sold to financial institutions, according to the statement. All other BancInsure products (including P&C and workers’ compensation lines) remain profitable and continue to grow in accordance with our business plans.“The 2008 results are disappointing,” Sargent continues, “However, we are confident that our business model, capital management plans, and underwriting actions will yield improved results and provide appropriate assurances to all of our partners, as well as to A.M. Best Co. Our financial strength and stability are essential components of our success and we are taking steps to strengthen our financial results.”Battle Creek Mutual Insurance Co.A.M. Best has affirmed the financial strength rating of “B+” (good) and issuer credit rating of “bbb-” of Battle Creek Mutual Insurance Co. The outlook for both ratings has been revised to negative from stable.The ratings reflect Battle Creek’s adequate level of risk-adjusted capitalization, long-standing local market presence and conservative investment portfolio, which produced a steady stream of income and offset underwriting losses over several years. Additionally, the ratings also reflect management’s corrective actions to improve profitability, such as rate revisions, cancellation of unprofitable agencies and adhering to tighter underwriting guidelines.Central Co-Operative Insurance Co. A.M. Best has upgraded the ICR to “bbb+” from “bbb,” and affirmed the financial strength rating of “B++” (Good) of Central Co-Operative Insurance Co. The outlook for both ratings is stable.The upgrading of the ICR of Central Co-Op reflects its trend of positive operating performance, favorable risk-adjusted capitalization and long-standing local market presence in its operating territory. Central Co-Op’s capital position is the outcome of several years of positive underwriting results derived from adhering to tightened underwriting guidelines during a period of competitive market conditions, coupled with a portfolio of invested assets that generated a steady stream of investment income. Delta Dental A.M. Best downgraded the FSR to “B++” (good) from A- (excellent) and ICR to “bbb+” from “a-” of Delta Dental of California (DDC) and its subsidiary, Delta Dental Insurance Co. (DDIC) The outlook for the ratings has been revised to stable from negative.Concurrently, A.M. Best has affirmed the FSR of “B+” (good) and ICRs of “bbb-” of Delta Dental of Pennsylvania and Delta Dental of New York. The outlook for these ratings is stable.These rating actions are driven by the decline in DDC and DDIC’s capitalization, as 2008 is expected to be the second consecutive year of a decrease in capital. In 2007-2008, capitalization was impacted by a $59 million charge related to new pension rules. Furthermore, DDC is expected to have unrealized losses in 2008 from its investment portfolio that may exceed $40 million. DDC’s net income of $60 million over that period id not completely offset those losses, leaving a net decrease of $39 million. Homesteaders Life Co. A.M. Best downgraded the issuer credit rating to “bbb” from “bbb+,” and affirmed the financial strength rating of B++ (good) of Homesteaders Life Co. The outlook for both ratings has been revised to stable from positive.These rating actions follow the termination of the merger agreement between American Enterprise Group Inc. and Homesteaders that had been announced in January 2009. At that time, A.M. Best believed the merger would provide Homesteaders with access to capital to materially improve its risk-based capital position, and serve to alleviate concerns regarding the company’s significant investment exposure to commercial mortgages and offset the impact of potential future investment losses in its fixed income portfolio. Additional concerns surfaced in late January with regards to a reinsurance counterparty of Homesteaders, Scottish Re (U.S.) Inc. (Scottish Re), which was placed under a regulatory order of supervision by the Insurance Commissioner of Delaware. Homesteaders continues to have significant exposure to reinsurance obligations that it ceded to Scottish Re.Life Insurance Co. of Louisiana A.M. Best upgraded the financial strength rating to “B” (fair) from “B-“ (fair), and the issuer credit rating to “bb” from “bb-” for Life Insurance Co. of Louisiana (LICOL). The outlook for both ratings is stable.These rating upgrades reflect LICOL’s strengthened risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio, and the stabilization in earnings. A.M. Best expects the company’s risk-adjusted capitalization will remain adequate to support its ongoing insurance and investment risks over the medium term. LICOL also has reported positive operating results in recent years, following an earlier statutory loss stemming from a large claim. Furthermore, operating earnings have stabilized and have been supported by net investment income and realized capital gains as the company reduces its equity exposure.Oxford Life Insurance Co. A.M. Best affirmed the FSR of “B++” (good) and ICR of “bbb+” of Oxford Life Insurance Co., Christian Fidelity Life Insurance Co. and Dallas General Life Insurance Co. A.M. Best also has affirmed the FSR of “B+” (good) and ICR of “bbb-” of North American Insurance Co. Collectively, these companies are known as the Oxford Group, and all are subsidiaries of AMERCO, which is the parent of U-Haul International Inc., the largest moving and storage operator in the United States. The outlook for all ratings is stable.The Oxford Group has maintained profitable operating results and increased capitalization over the past year. Additionally, over the past few years its investment portfolio was restructured to reduce risk and improve liquidity, which enabled the group to avoid taking large realized capital losses in 2008. The Oxford Group’s business strategy is to continue to focus on the senior market. The Medicare supplement business continues to generate good profitability. Positive gains and a reduction in its below investment grade holdings also have contributed to the group’s strengthened capital position.Texas Life Insurance Co. A.M. Best affirmed the FSR of “A-“ (excellent) and ICR of “a-” of Texas Life Insurance Co. The outlook for both of these ratings is stable.Texas Life was acquired from MetLife Inc. in March 2009. Texas Life, with a distribution presence in 49 states, focuses on the selling of simplified universal life and whole life policies primarily to the educational workplace market through independent distributors.Texas Life’s ratings reflect the solid capitalization and lengthy history of profitable operations.Wilton Re A.M. Best revised the outlook to stable from positive and affirmed the FSR of “A-“ (excellent) and ICR of “a-” of Wilton Reinsurance Bermuda Ltd., Wilton Reassurance Co. and Wilton Reassurance Life Co. of New York.The revised outlook for Wilton Re reflects A.M. Best’s opinion that the impact of the current economic turmoil limits the likelihood of a rating upgrade over the intermediate term. The ratings of Wilton Re are based upon its consistent history of profitable net premium growth, A.M. Best’s belief that the company will adhere to its business plan of growing largely through reinsuring life books of business and A.M. Best’s expectation that Wilton Re will maintain strong risk-adjusted capitalization levels. In A.M. Best’s view, Wilton Re’s current risk-adjusted capital position is more than adequate to support its existing business.

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