A.M. Best Affirms Ratings of American Modern Insurance Group and Its Members.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of American Modern Insurance Group (American Modern) (Amelia, OH) and its property/casualty members. Concurrently, A.M. Best has upgraded the FSR to A+ (Superior) from A- (Excellent) and ICR to "aa-" from "a-" of American Modern's formerly separately rated subsidiary, First Marine Insurance Company (First Marine) (Osage Beach, MO). The outlook for all ratings is stable. The companies of American Modern are owned by Munich American Holding Corporation (Wilmington, DE), the U.S. based subsidiary of Munich Reinsurance Company (Munich, Germany). (See below for a detailed listing of the companies.)

The ratings of American Modern reflect its historical favorable capitalization, consistent investment income and generally profitable underwriting performance in recent years. The group functions as a niche provider of insurance products for the residential property, recreational vehicles and financial services markets through its multi-faceted distribution channels. The ratings also acknowledge the financial flexibility afforded American Modern as part of the Munich American Holding Corporation organization.

Partially offsetting these positive rating factors are American Modern's above average expense levels in relation to the property lines industry composite and elevated premium leverage. In addition, as over half of American Modern's business is residential property, its performance is susceptible to frequent and severe weather events as demonstrated in 2008. However, American Modern continues to maintain reinsurance programs, modify underwriting criteria and selectively spread its geographical risks in catastrophe-prone areas to mitigate potential effects of future catastrophic events.

First Marine is a provider of various watercraft coverages and was purchased by American Modern Home Insurance Company (Cincinnati, OH) in 2008. The ratings of First Marine reflect its participation as a new member of American Modern's inter-company pooling agreement.

A.M. Best also has affirmed the FSR of A- (Excellent) and ICR of "a-" of American Modern Life Insurance Company (American Modern Life) (Cincinnati, OH) and the FSR of B++ (Good) and ICR "bbb" of Southern Pioneer Life Insurance Company (Trumann, AR). The outlook for these ratings is stable.

These ratings are based on the life companies' strong risk-adjusted capitalization and the support of their holding company, American Modern.

Partially offsetting these factors are the companies' modest earnings performance, their relatively small contributions to the parent organization and a susceptibility to further erosion of direct premiums written due to the economic environment and decline in lending.

The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for the American Modern Insurance Group and its following property/casualty members:

* American Modern Home Insurance Company

* American Family Home Insurance Company

* American Southern Home Insurance Company

* American Western Home Insurance Company

* American Modern Select Insurance Company

* American Modern Lloyds Insurance Company

* American Modern Insurance Company of Florida Incorporated

* American Modern Surplus Lines Insurance Company

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

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

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.