A.M. Best Affirms Ratings of Travelers Insurance Company Limited.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating (ICR) of "a+" of Travelers Insurance Company Limited (TIC) (United Kingdom). The outlook for both ratings is stable.

A.M. Best expects TIC to maintain excellent stand-alone risk-adjusted capitalisation in 2009, supported by a moderate increase in shareholders' funds from GBP 506 million in 2008. In addition, the ratings factor explicit parental support in the form of a guarantee in respect of all TIC's liabilities provided by St. Paul Fire and Marine Insurance Company, a subsidiary of its ultimate parent, The Travelers Companies, Inc. (St. Paul, MN) [NYSE: TRV].

A reduction in TIC's pre-tax profit is expected in 2009, from the GBP 144 million achieved in 2008, largely due to the absence of a material release from prior year reserves (2008: GBP 81 million). Although rates are stabilising, rating conditions for TIC's main lines of business in the United Kingdom and Ireland remain competitive. A solid net investment yield is anticipated in 2009, albeit lower than the 7% achieved in 2008, a result which benefited from unrealised investment gains of GBP 32.7 million.

TIC has a strong position in the UK market as a specialist underwriter of commercial business and continues to expand its presence in Ireland. In A.M. Best's opinion, the company is of strategic importance to its U.S.-domiciled ultimate parent as its means of access to these two markets. The company's gross premiums written are expected to increase by approximately 10% in 2009 (2008: GBP 316 million), driven by growth of its Irish personal lines business.

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.