A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a+" of AMEX Assurance Company (AMEX Assurance) (Chicago, IL). AMEX Assurance is a wholly owned subsidiary of American Express Company (American Express) (New York, NY) [NYSE: AXP].

The outlook for both ratings is stable.

The ratings reflect AMEX Assurance's strong capital position and trend of operating income generated by providing insurance products to American Express card members. Offsetting these positive rating factors is AMEX Assurance's limited business scope as the majority of its products is confined primarily to American Express card members and lack in growth in policyholders' surplus as demonstrated over the past five years. This is due to all of AMEX Assurance's prior years' net income being returned to American Express through stockholder dividends.

AMEX Assurance's strong capital position is reflective of its conservative investment risk profile and favorable operating results driven by solid profit margins. The favorable operating results reflect the company's low cost, direct marketing strategy and its emphasis on travel-related and other ancillary insurance coverages offered primarily to American Express card members.

As AMEX Assurance's stable outlook indicates, its ratings and outlook are expected to be maintained over the near term. Nevertheless, there might be negative actions on AMEX Assurance's ratings and/or outlook if there is a decline in premium writings caused by a prolonged economic downturn and a sustained reversal in operating profitability.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: "Catastrophe Analysis in A.M. Best Ratings"; "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; "Rating Members of Insurance Groups"; and "Evaluating Non-Insurance Ultimate Parents." Best's Credit Rating Methodology can be found at ambest.com/ratings/methodology.

A.M. Best Company is an insurance rating and information source.

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