A.M. Best Upgrades Rating of London General Insurance Company and Combined Life Assurance Company; Assigns Issuer Credit Rating.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating to A- (Excellent) from B++ (Very Good) of London General Insurance Company Limited (LGI) (United Kingdom) and Combined Life Assurance Company Limited (CLAC) (United Kingdom). At the same time, A.M. Best has assigned an issuer credit rating of "a-" to both companies. All ratings have a stable outlook.

The rating actions reflect LGI and CLAC's stable business position, strong and improving operating performance and strengthening capitalisation.

LGI has a leading position in its specialist lines of extended warranty, technology insurance, creditor and contractors' liability. A.M. Best believes that gross premiums written will remain stable during 2006 as the new deals gained replace the contracts not renewed by LGI and CLAC during 2004-2005. Longer term, the company's expansion into the eastern European markets will provide strong growth opportunities. A.M. Best expects CLAC to develop its position in the creditor protection market, acting as a partner in deals written by LGI.

LGI and CLAC are to be acquired by Onex, a Canadian private equity group, with negotiations likely to be completed during the fourth quarter of 2006. The existing board of directors and management structure will remain post acquisition, retaining the specialist expertise. In A.M. Best's opinion, the sale provides the companies with opportunity to grow, especially in the brokered business.

A.M. Best believes that both companies' risk-adjusted capitalisation is strengthening due to the significant reduction in counterparty risk arising from the high levels of reinsurance recoverables. This is driven both by the planned cancellation and run off of a large reinsurance agreement and the extensive and increasing use of collaterals used as backing for the remaining recoverables.

A.M. Best believes that both companies are likely to continue their strong financial performance shown in 2005 when pre-tax profits grew by 86% and 15% for LGI and CLAC, respectively. LGI's combined ratio of 77% is likely to remain stable with the main contributor being the high acquisition costs.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

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.