Market Overview

A.M. Best Removes from Under Review and Upgrades Credit Ratings of The Warranty Group, Inc.'s Insurance Subsidiaries


A.M. Best has removed from under review with positive
implications and upgraded the Financial Strength Rating (FSR) to A
(Excellent) from A- (Excellent) and the Long-Term Issuer Credit Rating
(Long-Term ICR) to "a" from "a-" of Virginia Surety Company, Inc.
(VSCI) (Chicago, IL). Concurrently, A.M. Best has removed from under
review with developing implications and upgraded the FSR to A
(Excellent) from A- (Excellent) and the Long-Term ICR to "a" from "a-"
of London General Insurance Company Limited (LGI) and London
General Life
Company Limited (LGL). Both companies are
domiciled in Surrey, U.K. and assessed together as the TWG Europe
(TWGE) rating unit. The outlooks assigned to these Credit
Ratings (ratings) is stable.

These rating actions follow the May 31, 2018 announcement by Assurant,
(Assurant) (headquartered in New York, NY) (NYSE:AIZ) that it
has completed the acquisition of TWG Holdings Limited and its
subsidiaries (TWG), including VSCI, LGI and LGL, from TPG Capital.

The ratings reflect VSCI's balance sheet strength, which A.M. Best
categorizes as very strong, as well as its adequate operating
performance, neutral business profile and appropriate enterprise risk
management (ERM). The ratings also reflect VSCI's strategic importance
to Assurant. From a strategic standpoint, VSCI strengthens Assurant's
position in the vehicle protection business in addition to enhancing its
distribution platform. These positive rating factors are offset by the
inherent credit risk associated with ceding significant portions of the
business to non-rated, unauthorized captive reinsurers. The credit risk
is somewhat mitigated by the use of collateral through letters of
credit, trust accounts and funds held on recoverable balances.

The ratings of LGI and LGL reflect TWGE's balance sheet strength, which
A.M. Best categorizes as strongest, as well as its adequate operating
performance, limited business profile and appropriate ERM. The ratings
benefit from the companies' strategic importance and expected
integration within Assurant. In particular, A.M. Best expects TWGE to
enhance Assurant's scale in its niche vehicle protection segment, and
deepen its geographical footprint in Europe. A.M. Best also expects
TWGE's risk-adjusted capitalization to remain at the strongest level,
underpinned by good internal capital generation and financial
flexibility. An offsetting rating factor in the assessment of TWGE's
balance sheet strength is the relatively small and diminishing size of
its balance sheet, which exposes its risk-adjusted capitalization to
potential volatility. The company has a track record of good
underwriting performance, with a three-year average combined ratio of
95% (2015-2017). TWGE has a niche profile in the extended warranty and
accidental damage segments across Europe that has a track record of good
underwriting performance. A.M. Best expects premium volumes to decline
over the medium term as the group protects its underwriting margin. An
additional offsetting rating factor is TWGE's highly concentrated
customer base.

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases

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