A.M. Best Affirms Ratings of AMEX Assurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the financial strength rating of A (Excellent) and the 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) [NYSE: AXP]. The outlook for both ratings is stable.

The ratings reflect AMEX Assurance’s strong capital position and five-year 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 the result of 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, generally favorable reserve development 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, A.M. Best expects the ratings and outlook to be maintained over the near term. However, there may be future negative rating actions if there is a decline in premium writings caused by a billing system issue, increased competition in the payments industry or a global economic downturn or terrorist event that results in a sustained reversal in operating profitability. Additionally, a potential negative rating action and/or outlook change may occur if American Express increases its dividend requirement, which results in a material decline in risk-adjusted capitalization as represented by Best’s Capital Adequacy Ratio (BCAR).

This press release relates to rating(s) 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 visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Kevin Dorsey, 908-439-2200, ext. 5401

Senior Financial Analyst

[email protected]

or

Richard Attanasio, 908-439-2200, ext. 5432

Vice President

[email protected]

or

Christopher Sharkey, 908-439-2200, ext. 5159

Senior Manager, Public Relations

[email protected]

or

Jim Peavy, 908-439-2200, ext. 5644

Assistant Vice President, Public Relations

[email protected]

Source: A.M. Best