|[August 21, 2014]
A.M. Best Affirms Ratings of AMEX Assurance Company
OLDWICK, N.J. --(Business Wire)--
A.M. Best has affirmed the financial strength rating of A
(Excellent) and the issuer credit rating of "a+" of AMEX Assurance
Company (AMEX Assurance) (Chicago, IL). AMEX Assurance is a wholly
owned subsidiary of American Express (News - Alert) Company (American Express)
(New York, NY) [NYSE: AXP]. The outlook for both ratings is stable.
The ratings reflect AMEX Assurance's strong capital position and trend
of operating income generated by providing insurance products to
American Express card members. Offsetting these positive rating factors
is AMEX Assurance's limited business scope with the majority of its
products confined primarily to American Express card members and a lack
in growth in policyholders' surplus as demonstrated over the past five
years. This is due to all of AMEX Assurance's prior years' net income
being returned to American Express through stockholder dividends.
AMEX Assurance's strong capital position is reflective of its
conservative investment risk profile, generally favrable reserve
development and favorable operating results driven by solid profit
margins. The favorable operating results reflect the company's low cost,
direct marketing strategy and its emphasis on travel-related and other
ancillary insurance coverages offered primarily to American Express card
As AMEX Assurance's stable outlook indicates, its ratings and outlook
are expected to be maintained over the near term. However, there may be
future negative rating actions if there is a decline in premium writings
caused by a global economic downturn or a terrorist event that results
in a sustained reversal in operating profitability and/or an increased
dividend requirement from its parent that results in a material decline
in capitalization that is not representative of its current rating level.
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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