A.M. Best Co. and Fitch Ratings released ratings updates. The following are some of the most recent:

Americas Insurance Co.

A.M. Best Co. assigned a financial strength rating (FSR) of B (fair) and an issuer credit rating (ICR) of “bb” to Americas Insurance Co. The outlook assigned to both ratings is stable.

Americas’ positive rating factors include its low underwriting leverage and conservative investment portfolio, according to the rating agency. Additionally, Americas’ management has good local market knowledge, and the current risk profile is supported by adequate reinsurance coverage.

AMEX Assurance Co.

A.M. Best Co. affirmed the FSR of A (excellent) and ICR of “a” of AMEX Assurance Co., a wholly owned subsidiary of American Express Co. The outlook for both ratings is stable.

The ratings reflect AMEX Assurance’s strong capital position and increased earnings as it recently resumed retaining the premiums from the American Express Cardmembers, A.M. Best says. Partially offsetting these positive rating factors is the company’s limited customer marketing scope.

AXIS Specialty Ltd. and AXIS Capital Holdings Ltd.

A.M. Best Co. affirmed the FSR of A (excellent) and ICR of a+ of AXIS Specialty Ltd. (AXIS) and its operating affiliates. Concurrently, A.M. Best affirmed the ICR of bbb+ and all existing debt ratings of AXIS Capital Holdings Ltd. (ACHL). The outlook for all ratings is stable.

The ratings of AXIS reflect its consistently strong operating performance, excellent risk-based capitalization, robust risk management controls and its highly experienced management team, according to the rating agency. AXIS’ operating strategy is dedicated to maintaining a diversified book of business, both geographically and by line of business, with a focus on broker-sourced short- and medium-tail lines, principally specialty insurance lines including property, marine, aerospace and political risk, along with property catastrophe reinsurance coverage and other specialty reinsurance coverages.

Cincinnati Financial Corp.

Fitch Ratings downgraded the issuer default rating (IDR) of Cincinnati Financial Corp. (CFC) to A- from A and its senior debt ratings to BBB+ from A-. Additionally, Fitch downgraded the insurer financial strength (IFS) ratings of CFC's three standard market property/casualty insurance subsidiaries led by The Cincinnati Insurance Co. (CIC) and its life insurance subsidiary, The Cincinnati Life Insurance Co., to A+ from AA-. The rating outlook is stable.

The rating action is primarily driven by CFC's unfavorable underwriting performance within its property/casualty operations in 2008 and thus far in 2009, on an absolute basis and relative to comparably rated peers. Through the first six months of 2009, CFC posted a GAAP combined ratio of 112.1%.

CFC's recent underwriting results highlight the company's limited amount of geographic diversification relative to peers in the prior rating category. The company's top five states (Ohio, Illinois, Indiana, Pennsylvania and Georgia) accounted for almost 48% of earned premiums in 2008. This concentration results in a heightened sensitivity to competitive conditions and high catastrophe exposure to Midwest storm activity. The action reflects a somewhat more conservative perspective taken by Fitch than in the past with respect to concentration risk and the higher potential level of earnings volatility than its peers in the prior rating category, the rating agency says.

Colonial Life Insurance Co. (Trinidad) Ltd.

A.M. Best Co. downgraded the FSR to C (weak) from B (fair) and ICR to “ccc” from “bb” of Colonial Life Insurance Co. (Trinidad) Ltd. (CLICO). The ratings remain under review with negative implications. CLICO is an insurance member company of CL Financial L d. (CL Financial), a diversified holding company based in Trinidad & Tobago.

The rating agency’s actions reflect the continuing uncertainty over the future of CLICO’s fundamental life insurance and annuity businesses, as well as its inability to publish its financial results since the actions taken by the Central Bank of Trinidad & Tobago in January 2009.

A.M. Best notes that audited financial statements have not been filed for Dec. 31, 2008 for CLICO and CL Financial. Additionally, as part of its investment strategy, CLICO maintains a high concentration in related party assets, including large holdings in the banking and financial services, energy and manufacturing sectors.

Nationwide Mutual's Surplus Notes

Fitch Ratings downgraded Nationwide Mutual Insurance Co.'s (NMIC) outstanding surplus notes to BBB from BBB+ and assigned a BBB rating to the new $700 million 9.375% issuance of surplus notes due 2039. In addition, Fitch affirmed the IFS ratings on NMIC and its related inter-company pool members (collectively, Nationwide Mutual), as well as Nationwide Life Insurance Co. and Nationwide Life Insurance Co. of America (NWLA), at 'A'. Fitch also affirmed Nationwide Financial Services Inc.'s (NFS) senior unsecured debt at BBB. A full list of rating actions follows at the end of the release. The rating outlook remains negative.

Following the issuance, surplus notes represent 20% of consolidated statutory surplus. As a result of the added leverage, the notching between NMIC's IFS rating and its surplus note rating widened. Fitch uses a 15% maximum guideline for hybrid securities as a percentage of statutory capital in order to maintain standard notching.

The $700 million in surplus notes provide a beneficial increase in reported surplus but also add to ongoing expense obligations. When calculating consolidated debt-to-total capital, which includes debt at the downstream life holding company, surplus notes are given 75% equity credit. Pro forma June 30, 2009 consolidated equity-adjusted debt-to-total capital following the surplus note issuance was 20%.

Unitrin Inc.

Fitch Ratings has affirmed IDR of Unitrin Inc. at BBB-, its $560 million senior notes at BB+, and removed them from rating watch negative. The rating outlook for all ratings is negative.

Unitrin's negative outlook mainly reflects Fitch's concern regarding the uncertainty at Fireside Bank, Unitrin's consumer finance business, over the next 12 to 18 months versus a more near-term concern reflected by the negative watch.

The ratings also reflect adequate capitalization of Unitrin's insurance subsidiaries, satisfactory operating results and significantly reduced equity exposure, which should lead to lower capital volatility.

Additionally, the ratings reflect Fitch's expectation that pricing softness in the property/casualty insurance marketplace will persist. Favorably, Unitrin's financial leverage remains within Fitch's expectation at 24.9% on June 30, 2009.

XL Capital Ltd.

Fitch Ratings affirms and removes from rating watch negative the ratings of XL Capital Ltd. (XL) and its property/casualty (re)insurance subsidiaries, including the IDR for XL at BBB+, and the IFS rating of its core operating companies at 'A'. The rating outlook is negative.

The rating action follows XL's release of second quarter and year-to-date 2009 earnings. The company reported net income of $258 million for the first six months of 2009. XL's GAAP equity totaled $7.5 billion at June 30, 2009 up $1.4 billion or 22% from year-end 2008.

During the second quarter, XL had a mark-to-market increase of $1 billion, which was driven by the tightening of credit spreads on both corporate and structured credit assets that more than offset the impact of rising interest rates.

Resolution of the negative watch was contingent upon the successful execution of XL's plans to de-risk its investment portfolio, stabilization of investment performance and completion of its strategic review of life operations. The negative outlook reflects XL's exposure to investment market conditions, particularly in the asset portfolio of its run-off life operations, as well as the uncertain uneconomic environment.

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