A.M. Best Affirms Ratings of AMI Insurance Limited.

Rating Outlook Remains Positive

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating (ICR) of "a+" for AMI Insurance Limited (AMI) (New Zealand). The outlook for both ratings is positive.

The ratings are based on an analysis of the consolidated financial accounts of the AMI Members Trust, of which AMI is the only operating entity. The rating affirmations reflect AMI's secured distribution platform, strong risk-adjusted capitalization, profitable underwriting results and consistently strong growth in operating surplus, as well as its good quality investment portfolio.

Brand loyalty from its customers in the local motor insurance market along with its extensive branch network across the country have enabled AMI to achieve consistent premium growth over the past five years. CLIC Car Insurance Limited (CLIC), a separate distribution platform, was established in April 2007 by AMI to explore opportunities in the second tier motor vehicle market with a focus on non-standard motor risks.

The company's capital position, as measured by Best's Capital Adequacy Ratio (BCAR), and underwriting leverage remained strong to support the risks underwritten. The net premium leverage ratio improved moderately to 0.85 times in fiscal year 2007 from 0.92 times in fiscal year 2006. Prospectively, A.M. Best anticipates that AMI will continue to maintain a strong level of risk-based capitalization to facilitate its ongoing business growth.

Positive underwriting results along with stable investment earnings contributed favorably to overall operating performance in fiscal year 2007, although the overall net operating ratio experienced a slight deterioration. AMI's net income for fiscal year 2007 marginally declined to NZD 28.2 million (USD 21.7 million), translating into a return on equity of 10%. With approximately 70% of its total assets invested in cash, bank deposits and fixed income securities, the company has good liquidity to support the short-tailed nature of its insurance liabilities.

These positive rating factors are somewhat offset by pressure on the company's underwriting margin caused by persistent soft rates in certain personal lines, which may result in downward pressure on overall operating profitability.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.