A.M. Best Revises Outlook to Negative for Universal North America Insurance Company.

OLDWICK, N.J. -- A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of "a-" of Universal North America Insurance Company (UNAIC) (San Antonio, TX). Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of "a" of Universal Insurance Group (UIG) and its members, Universal Insurance Company, Eastern America Insurance Company and Caribbean Alliance Insurance Company. In addition, A.M. Best Co. has affirmed the FSR (FSR) of B++ (Good) and ICRs of "bbb+" of Universal Life Insurance Company (ULIC). The ratings for UIG and ULIC have a stable outlook. All companies are located in Puerto Rico unless otherwise noted.

The revised outlook for UNAIC reflects weak operating results in 2008 that were not in line with expectations shared with A.M. Best during the initial rating process last year. In 2008, UNAIC posted an underwriting loss of $4.9 million, driven primarily by losses associated with Hurricane Ike and wind/hail events throughout the year as well as losses associated with an assumed book of business. In addition, A.M. Best has concerns with the level of projected premium growth through direct and assumed business over the near term, the inherent risks in integrating new business acquired through renewal rights on existing books of business and the potential strain that this growth places on risk-adjusted capitalization and operating results. This concern is somewhat offset by UNAIC's supportive capitalization, sound business plan and experienced management team. The rating also recognizes the financial support provided through ongoing capital contributions by its ultimate parent, Universal Group, Inc. (UGI), to ensure that risk-adjusted capitalization supports current operations and future growth initiatives.

The affirmation of UIG's ratings reflect its solid operating performance, strong capitalization and its established market position as one of the leading property writers in Puerto Rico. The positive rating factors are derived from the group's profitable underwriting performance and solid stream of investment income, which have resulted in sizeable pre-tax operating income and strong surplus growth over the most recent five-year period.

The affirmation of ULIC's ratings reflect the company's well-established marketing presence and brand name recognition in the Puerto Rico marketplace, the financial commitment of its parent, UGI, and its adequate level of risk adjusted capitalization.

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.