A.M. Best Upgrades Ratings of First Capital Insurance Limited.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating to A (Excellent) from A- (Excellent) and the issuer credit rating to "a" from "a-" of First Capital Insurance Limited (First Capital) (Singapore). The outlook for both ratings is stable.

The ratings reflect the continued improvement in First Capital's operating results, its superior risk-adjusted capitalization and disciplined underwriting strategy. The rating upgrade acknowledges the company's ability to manage its premium growth and to strengthen its market profile in recent years.

First Capital consistently achieved a profitable underwriting margin in the last five years despite high premium growth. Underwriting income improved to SGD 31 million (USD 20.7 million) in 2007 from SGD 18 million (USD 12 million) in 2006 as a result of First Capital's stable loss ratio and negative expense ratios due to the net commission and profit commission earned from the significant amount of premium ceded to reinsurers participating in First Capital's outward proportional treaties. In view of its disciplined underwriting strategy, A.M. Best expects the company to maintain its strong underwriting profitability in the near future.

First Capital underwrites primarily domestic short-tail business. It is the market leader in the marine hull business, which accounted for 32% of its business portfolio in 2007.

Notwithstanding the competitive market landscape, the company gradually and profitably expanded its market share from 1% in 2003 to 6% in 2007 as measured by gross premiums written in the domestic market.

Significant surplus growth as a result of earnings retention led to a consistent improvement in First Capital's risk-based capitalization as measured by Best's Capital Adequacy Ratio (BCAR) over the past five years. First Capital's BCAR demonstrates that it is superiorly capitalized to support the risks underwritten regardless of the increase in equity risk in the first 10 months of 2008. In anticipation of its continued growth in surplus, A.M. Best expects the company's risk-adjusted capitalization will remain adequate to support its ongoing moderate degree of premium expansion in the near term.

Offsetting these positive factors include the potential volatility associated with First Capital's investment return due to the increase in equity investments in 2008. With the increased exposure to equities in 2008, the recent financial market turmoil moderately exacerbated the return on the company's investment.

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

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.