A.M. Best Assigns Ratings to Transportation Property & Casualty Co., Inc.

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of "a-" to Transportation Property & Casualty Co., Inc. (TPCC) (Burnaby, British Columbia, Canada). The outlook assigned to both ratings is stable. These ratings are the first to be assigned to a Canadian captive insurance company domiciled in Canada's only captive domicile of British Columbia.

These ratings are based on TPCC's excellent capitalization and operating performance and favorable profile as part of the Greater Vancouver Transportation Authority (GVTA) and BC Transit. Partially offsetting some of the positive rating factors are the company's relatively small scale of operations and its dependence on reinsurance to participate in its shareholders' high excess coverage limits.

TPCC is owned by GVTA (90%) and BC Transit (10%), which are public transportation authorities in the Canadian province of British Columbia. TPCC is a sophisticated captive insurance company, which provides primary insurance coverage solely to these shareholders. The captive also participates in excess liability and property insurance agreements for its shareholders; however, it cedes 100% of these participations to well-rated reinsurers. TPCC has demonstrated its usefulness and effectiveness to the transportation authorities over many years by providing them flexibility for insurance program structuring and substantial insurance cost efficiencies. It is an integral part of these entities' existing projects and future planning.

TPCC is very strongly capitalized based on solid risk-adjusted capitalization and low underwriting leverage. Its investments are limited to government securities as it follows a conservative investment policy. TPCC's loss exposures are limited on a per occurrence basis, as well as in the aggregate for liability losses. The credit risk in the event of a large excess layer loss is mitigated by the high quality of reinsurance. In addition, TPCC benefits from enhanced financial flexibility as it is owned by two large public entities that have taxing powers and the ability to set transit fares.

TPCC's operating performance, as reflected in low loss, expense and combined ratios, has been excellent except for 2003-2004, when it incurred some large property losses. The captive's objective is to produce underwriting profits, and it therefore uses careful underwriting and aggressive claims handling to accomplish this. Considering the captive's relatively small premium volumes and large surplus position, return measures are also strong and benefit from TPCC's tax-exempt status.

For current Best's Ratings and independent data on the captive and alternative insurance market, please visit www.ambest.com/captive.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.