Ratings Recap: Travelers, Am. Capital, Fairmont, Univ. American, Fireman’s Fund (Mo.), ACE (Ill.) CIGNA, Conseco

March 19, 2008

Fitch Ratings has affirmed its ratings on The Travelers Companies, Inc (TRV). as follows:
–Issuer Default Rating (IDR) ‘A+’;
–Senior unsecured notes ‘A’
–subordinated notes ‘A-‘;
–Insurer financial strength (IFS) on insurance company subsidiaries at ‘AA’. The outlook on all of the ratings is stable. “The affirmations reflect TRV’s robust earnings profile and strong capitalization and competitive positions in a wide variety of business lines. The affirmation also reflect Fitch’s belief that TRV’s 2008 earnings are likely to be pressured by declining margins in many business lines, but will continue to be strongly supportive of the company’s high ratings.”

A.M. Best Co. has assigned a financial strength rating (FSR) of ‘B++’ (Good) and issuer credit ratings (ICR) of “bbb” to American Capital Assurance Group (ACA) and its member, American Capital Assurance Corporation. Best also removed from under review with negative implications and upgraded the FSR to ‘B++’ (Good) from ‘B+’ (Good) and ICR to “bbb” from “bbb-” of the other member company, Florida-based Home Pointe Insurance Company. The outlook assigned to all ratings is stable.
“These rating actions reflect ACA’s adequate risk-adjusted capitalization, as well as its experienced management team with a track record of success in the Florida marketplace, which employs prudent underwriting standards, innovative pricing systems and effective reinsurance programs,” Best explained.

A.M. Best Co. has withdrawn the financial strength rating (FSR) of ‘B++’ (Good) and the issuer credit rating (ICR) of “bbb” of Texas-based Fairmont Specialty Lloyds, a wholly owned indirect property/casualty subsidiary of Canada’s Fairfax Financial Holdings Limited. Best said: “Effective December 31, 2007, Fairmont Specialty Lloyds was dissolved as part of an initiative to streamline the organizational structure of Fairfax’ U.S. run-off insurance operations.”

Standard & Poor’s Ratings Services said that Universal American Corp.’s (rated ‘BB+’/Negative/) announcement that it will have a $26.7 million writedown of its subprime holdings is not resulting in any rating action. “The magnitude of the writedown reflects the holdings’ market value as of Dec. 31, 2007, and the company anticipates that there will be further impairment on these securities in the first quarter of 2008,” said S&P, adding that it “expects that the impairments on these securities will be modest through the first quarter of 2008, at less than 10 percent of year-end 2007 statutory capital (including the asset valuation reserve).”

A.M. Best Co. has withdrawn the financial strength rating (FSR) of ‘A ‘(Excellent) and issuer credit rating (ICR) of “a” and assigned a category NR-5 (Not Formally Followed) to Fireman’s Fund Insurance Company of Missouri (FFICM) of Novato, Calif. Best said it took the rating action following the announcement that FFICM has merged with its sister company, American Automobile Insurance Company (AAIC), a member of the Fireman’s Fund Insurance Companies, as of November 1, 2007. “As part of the merger, AAIC assumed all of the liabilities and obligations under and according to the terms of the policies issued by FFICM,” Best noted. “As a result, policyholders of FFICM will now be insured by AAIC.”

A.M. Best Co. has withdrawn the financial strength rating (FSR) of A+ (Superior) and issuer credit rating (ICR) of “aa-” of ACE Insurance Company of Illinois, a wholly owned indirect P/C subsidiary of Bermuda’s ACE Limited. “Effective December 31, 2007, ACE Insurance Company of Illinois merged into ACE American Insurance Company (ACE American of Pennsylvania),” Best explained. The merger was completed as part of an initiative to streamline the legal structure of ACE’s U.S. P/C operations.

Standard & Poor’s Ratings Services has assigned its preliminary ‘A-2’ rating to CIGNA Corp.’s proposed $500 million 4(2) commercial paper program, which replaces a 3(a)(3) commercial paper program. “CIGNA plans to draw on the new 4(2) commercial paper program for general corporate purposes, which could include cash for its $1.5 billion acquisition of Great-West Healthcare (cash purchase price),” said S&P. This acquisition is expected to close in April 2008. “The rating is based on CIGNA’s strong consolidated competitive position, operating performance, and capitalization, as well as its good financial flexibility,” explained S&P credit analyst Shellie Stoddard.

Standard & Poor’s Ratings Services said today that the announcement by Conseco Inc. (rated ‘B+’/Negative/–) that it will delay its 2007 10-K filing with the SEC will not affect the ratings on the company. S&P noted that the delay “is the result of the company’s ongoing evaluation of the SEC staff’s view regarding the appropriate accounting treatment for additional active life reserves that Conseco set up related to long-term care rate increases. We expect the 10-K to be filed by March 28.” S&P added that based on, Conseco’s performance in 2007 it believes the ratings remain consistent.

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