A.M. Best Affirms Ratings of the Wawanesa Insurance Group Members.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) of The Wawanesa Mutual Insurance Company (WMIC) (Winnipeg), The Wawanesa Mutual Insurance Company (United States Branch) and Wawanesa General Insurance Company (WGIC) (both of San Diego, CA). A.M. Best has also affirmed the FSR of A (Excellent) of Wawanesa Life Insurance Company (Winnipeg). The outlook for all ratings is stable.

The rating of WMIC is based upon its superior level of capitalization, strong balance sheet, above average liquidity, conservative investment portfolio, profitable operating performance and leading market position in the Canadian property/casualty insurance industry. The rating also reflects WMIC's broad geographic distribution and diversified product mix as well as its sound risk management and experienced management team.

These rating strengths of WMIC are offset in part by the challenges it faces in the personal lines automobile market due to regulatory intervention, competitive pricing pressures primarily on commercial lines business, below average interest rates and volatility in the equities markets and the historically weaker operating performance of WGIC in the United States.

The rating of WGIC is based upon its competitive marketing strategies and the explicit financial support of WMIC. Partially offsetting these positive rating factors are the weaker capitalization of WGIC, its below average operating performance and the challenging regulatory and competitive business environment of the California preferred automobile sector that the company operates in.

WMIC is the largest mutual insurance company in Canada in terms of capital and surplus. The company maintains a superior surplus base supported by operating profitability and significant unrealized gains in its investment portfolio. Furthermore, WMIC is well-positioned to remain strong through the current downturn in the underwriting cycle. WMIC's leadership position and strong regional presence have been enhanced by its long-term relationships with brokers.

In recent years, regulatory intervention into WMIC's automobile insurance markets in Canada appears to have had a positive impact on overall underwriting performance. However, A.M. Best remains cautious about the long-term effects these regulatory changes will have. The underwriting performance of WGIC has not matched WMIC's since its inception; however, the combined results of the U.S. operations have been positive.

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A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.