A.M. Best Affirms Ratings of Century Insurance Co., Ltd.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B+ (Good) and the issuer credit rating of "bbb-" of Century Insurance Co., Ltd. (CIC Saipan) (Northern Mariana Islands). The outlook for both ratings is stable.

The ratings reflect CIC Saipan's solid market position in Saipan, improvement in premium leverage and stable investment income. The ratings also acknowledge the company's efforts to achieve a better spread of geographical risk through steady business expansion in Guam and its plan to lower its asset risk on a stand-alone basis by transferring its affiliates--namely Century Insurance Company of Guam (CIC Guam) and Century Insurance Papua New Guinea--to its immediate holding entity, Tan Holdings Corporation.

CIC Saipan recorded improvement in net premium leverage on a consolidated basis from 1.7 times in 2006 to 1.54 times in 2007 due to higher surplus growth. CIC Saipan's capitalization on a consolidated basis, as measured by Best's Capital Adequacy Ratio (BCAR), remained adequate to support its risk profile in 2007, while the BCAR was weak on a standalone basis. Nonetheless, CIC Saipan's plan to transfer the ownership of CIC Guam and Century Insurance Papua New Guinea to its immediate parent will reduce both CIC Saipan's assets and underwriting risk on a stand-alone basis, although the planned capital repatriation of USD 2.0 million and the proposed USD 2.5 million of dividend payment after the transfer also will greatly reduce the company's capitalization on an absolute basis in 2008.

CIC has established a solid presence in both the Commonwealth of the Northern Mariana Islands (CNMI) and Guam through partnering with two key distributors. In an attempt to facilitate its ongoing business growth as well as diversify its book, CIC Saipan converted its Guam operation branch into a locally established operating subsidiary in 2006 and launched another subsidiary in Papua New Guinea in 2007.

Offsetting factors include volatile underwriting results, adverse operating conditions in Saipan, high catastrophe exposure in the CNMI and Guam, heavy reliance on two major distribution channels and credit risk associated with CIC Saipan's insurance receivables.

CIC Saipan suffered an underwriting loss in Saipan due to unfavorable claim experience of its motor book. Additionally, a further decline in written premium due to the closures of garment factories and a reduction of foreign workers in Saipan accelerated the increase in the company's expense ratio. Notwithstanding the sound underwriting results from Guam, CIC Saipan's consolidated combined ratio rose to 102.3% in 2007 from 92.8% in 2006.

CIC Saipan is subject to catastrophic perils in the CNMI and Guam even though it is reasonably protected under current reinsurance programs. Increased frequency in weather-related catastrophic events could potentially induce underwriting volatility for CIC Saipan.

CIC Saipan has a high degree of concentration risk associated with its distribution platform. The company sourced 90% of its business in terms of gross premiums written in 2007 through two major distribution channels. Additionally, CIC Saipan's insurance receivables remained high, representing more than 44% of the company's total consolidated assets as at year-end 2007. Any material adverse credit development in connection with the insurance receivables will put a strain on the company's financial strength.

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.