ZEP-RE (PTA REINSURANCE COMPANY) Nairobi, Kenya Operating Company Composite ZEP-RE (PTA REINSURANCE COMPANY) ZEP-RE Place, 8th Floor, Longonot Road, Upper Hill, P.O. Box 42769-00100, Nairobi, Kenya Web: www.zep-re.com Tel.: 254-20-497-3000 Fax: 254-20-273-8444 AMB#: 078388 BEST S CREDIT RATING Best s Financial Strength Rating: B++ Outlook: Stable Best s Financial Size Category: VIII RATING RATIONALE Rating Rationale: The ratings reflect ZEP-RE s (ZEP) excellent risk-adjusted capitalisation, resilient underwriting profitability and improving regional competitive position. Further positive rating drivers include B++ developments in its enterprise risk management (ERM) capability and financial flexibility provided by supportive shareholders. Partially offsetting rating factors include the ongoing challenges related to current reinsurance market conditions and the entity s exposure to Kenya s volatile business environment. ZEP-RE s risk-adjusted capitalisation is expected to remain excellent in 2016, supported by earnings generation and by a further subscription of equity from an existing shareholder. A.M. Best considers that ZEP-RE s risk-adjusted capitalisation will remain supportive of its current ratings in the medium term due to solid earnings and a likely continuation of the historical record of equity subscriptions by existing and new shareholders. Equity subscriptions are priced significantly above net asset value. Over the past five years, ZEP-RE has demonstrated its ability to attract profitable business by doubling its gross written premiums whilst maintaining strong and stable earnings. Profitability during the first three quarters of 2016 has been good with a loss ratio in the region of 55% and net income before tax ahead of 2015. In A.M. Best s view, ZEP s active management of its exposures will continue to promote profitable revenue growth. The nature of ZEP-RE s shareholders and the regulatory environment in the company s key markets, where it benefits from compulsory legal cessions, Printed February 15, 2017 www.ambest.com Page 1 of 7
support ZEP-RE s well-established competitive position. In addition, the strong regional presence and technical competence which ZEP-RE has established over time means that it is the lead reinsurer on some of its business and that a significant part of its premium income is not reliant on the compulsory legal cessions. Going forward, it is A.M. Best s opinion that the company s business will continue to include a concentration of business underwritten in Kenya whilst its franchise in the region grows. Kenya and other surrounding territories have a high risk profile due to volatile economic prospects, weak currencies and low levels of financial stability, which increase the expected volatility of the company s earnings. ZEP-RE has developed its business profile over time and, similarly, the ERM function has continued to evolve. The company s ERM provides it with a competitive advantage over local peers. ZEP-RE s risk management framework serves as an effective tool to help mitigate the effects on the company of the inherent instability of the business and economic environment in its key regional markets. A positive rating action could occur over time if ZEP-RE continues to develop its profile, corporate infrastructure, scale and regional business reach whilst maintaining strong risk-adjusted capitalisation and stable operating performance. A negative rating action could occur if there is a substantial deterioration of ZEP s risk-adjusted capitalisation or an increase in the perceived country risk of Kenya. FIVE YEAR RATING HISTORY Date Best s FSR Date Best s FSR 12/14/16 B++ 12/06/13 B+ 12/10/15 B+ 11/28/12 B+ 12/05/14 B+ BUSINESS PROFILE ZEP-RE is a privately owned reinsurer domiciled in Kenya. The company, also known as PTA Reinsurance, was established in 1993 through an Agreement of the governments of the Common Market for Eastern and Southern Africa (COMESA) region, with the objective of promoting development and integration within the COMESA region through the trade of reinsurance business. ZEP-RE is owned by a diverse range of institutions. Its main shareholders are Kenya Reinsurance Company Limited, Deutsche Investitions-und Entwicklungsgesellschaft mbh (DEG), the African Development Bank, PTA Bank and the Government of Rwanda with 19%, 15%, 13%, 11% and 6% shareholder interests, respectively. The company operates in several African markets with a focus on the southern and eastern regions. ZEP-RE enjoys a solid competitive position in its core markets. The company s access to compulsory legal cessions in Kenya and other regional markets sets the foundation of its currently strong competitive profile. In order to support its regional business objectives, ZEP-RE has reorganised its operations into three regional hubs across the African continent. The Eastern and Central Africa hub is based in Nairobi, the Southern Africa hub is based in Harare and the Western Africa hub is based in Abidjan. A Retakaful window, which was established in 2009 to service business from Sudan and other sharia based insurance markets, continues to grow in line with business plans but remains small compared to the overall company. In 2013 ZEP-RE acquired a 9% strategic investment in WAICA Reinsurance Corporation PLC (WAICA Re). WAICA Re is expected to support corporate development in Nigeria and Ghana. In the same year ZEP-RE also increased its stakes in Uganda Reinsurance Corporation and Tanzania Reinsurance Corporation. In 2014 ZEP-RE increased its stake in African Trade Insurance Agency, which provides trade credit and political risk insurance in Africa. ZEP-RE s strategic approach to diversification is focused on gaining access to economically profitable business and refraining from aggressive expansion where profitability is not sufficient to fall within the organisation s appetite. ZEP-RE underwrites a wide variety of risk classes, mainly on a proportional basis. Proportional business accounts for around 74% of total gross written premium (GWP). Non-proportional lines deliver approximately 15% whilst facultative accounts for the remaining 11%. Facultative business is expected to grow in significance over the medium term, as activity in infrastructure investment and in the oil and gas sector increases and also as ZEP-RE invests in its own organisation and skills base in these areas. Property and casualty are the main business lines written, representing 50% and 18% of total GWP respectively in 2015. Medical, marine, motor and life lines account for less than 10% each. In general, ZEP-RE s mix of GWP by line is expected to remain stable. Although the distribution of ZEP-RE s business is mainly based on brokerage relationships, overall reliance on this channel has slightly decreased in recent years. Approximately two-thirds of GWP is sourced from brokers and strong relationships with brokers have been helpful for international expansion. Management is keen to both increase direct client revenue where opportunities and market dynamics are favourable and to deepen relationships with brokers. RISK MANAGEMENT In A.M. Best s view, the company s current enterprise risk management (ERM) practices and procedures are adequate to manage its spread of operations, the complexity of its business and the volatile environment in which the company operates. In addition, A.M. Best considers that ZEP-RE s ERM constitutes a competitive advantage in its regional markets. The risk management function is governed by the company s Risk and Audit Committee, which is a board committee and is formally responsible for setting tolerances and overall risk appetite. Risk management is primarily implemented through the Risk Management Committee (RMC). The RMC reports to the managing director and is chaired by the general manager. It is the custodian of ZEP-RE s ERM framework and is responsible for organising quarterly risk management reviews. Individual departments are responsible for daily risk monitoring and monthly reporting. Internal audit reports quarterly to the Risk and Audit Committee, effectively adding a third layer of oversight to the reinsurer s ERM framework. ZEP-RE is planning to appoint a Chief Actuarial and Risk Officer in Q1 2017, whose responsibilities will Printed February 15, 2017 www.ambest.com Page 2 of 7
include completing a proprietary internal model for use in capital and exposure management and in pricing. The company has a detailed mapping of exposures categorised by their potential impact on earnings and solvency. New risks can be catalogued by business units, the steering committee or the board. Exposures are primarily those common to the risks of P&C reinsurers. ZEP-RE also is exposed to the legislative and political risks of the region although its establishment as a COMESA body is helpful in diminishing these risks. Underwriting and investment risks remain the main areas of focus for risk mitigation initiatives within ZEP-RE. In addition to processes and procedures in place for risk mitigation, what if scenarios are regularly evaluated to help prepare the risk management department for event risk and to control exposures. ZEP-RE s investment portfolio is exposed to market risks. These are controlled at the investment committee level, which sets guidelines. Currency risk is an important part of asset-liability management (ALM). The company regularly reviews asset-liability currency mismatch tolerances in order to manage the investment portfolio s foreign exchange exposure. The risk management function also uses scenario analysis to help monitor currency tail risks. Liquidity risk is primarily managed through maturity matching of assets and liabilities. Interest rate risk is managed using scenario testing, including parallel shifts in the yield curve. Equity risk management relies significantly on active monitoring and diversification. Operational and cyber risks are managed centrally in Nairobi whilst the hub structure is used to mitigate continuity risks. Underwriting and general management systems have been designed to allow access from different geographies, which facilitates multinational operations and also reduces country and continuity event risks. The focus is on increasing the security of these systems at the same time as the company expands its capabilities. Catastrophe Exposure and Management: ZEP-RE s largest catastrophe exposure relates to Kenyan earthquakes where the primary risk is in the Nairobi area. The company s catastrophe analysis makes use of an external model, and ZEP-RE s modelled 1 in 250 year probable maximum loss (PML) amounts to approximately 4.1% of ZEP-RE s exposure as at year-end 2015. The company bases its catastrophe retrocession programme on its modelled aggregate exposure. On this basis, net exposure reduces to an amount corresponding to circa 2% of capital and surplus. A.M. Best has investigated the consequences of using higher PMLs in its analysis. OPERATING PERFORMANCE Operating Results: ZEP-RE s operating performance has been strong. A.M. Best expects the company will continue to generate strong earnings in the medium term. Return on capital and surplus averaged 13.2% per annum (in USD) for the 2011-2015 period. The average reflects a return of 12.7% in 2015 which was affected by earthquake claims in Nepal, and higher returns in earlier years. Returns in the 14-15% region are anticipated to be achieved for 2016 and 2017 as good underlying profitability is further supported by improving results from the motor and medical lines. It is expected that earnings will, in addition, benefit from continued strong growth in premiums written. Pre-tax profit is therefore anticipated to progress towards the USD 30 million region for 2017, which compares to USD 20 million in 2015. ZEP-RE s status as a COMESA body means that profits are not subject to corporate taxation. Overall results have historically been supported by high returns from the company s investment portfolio, which has contributed an average of 62% to pre-tax profit during the five years to end 2015. A. M. Best expect investment returns to remain high but anticipates that the contribution of investment return to pre-tax profit will trend downwards towards the 50-55% region over the 2016 2018 period. Underwriting Results: The company s combined ratio is healthy, having been in the 85-90% region over the 2011 2015 period and averaging 88.3%. ZEP-RE is improving profitability in the problematic motor and medical lines through underwriting actions and restricting revenue from unprofitable clients. Overall profitability in the portfolio has remained strong, supported historically by performance of the large property and casualty lines. Underwriting profitability is expected to remain attractive with positive factors for ZEP-RE within its markets being partly offset by an expectation that those markets will become more competitive than in recent years. After a deterioration in the combined ratio in 2015 to 90.4%, in part due to earthquake claims in Nepal, A.M. Best expects the company s combined ratio to improve to 89% in 2016 and to remain at a similar level in 2017. Underwriting performance is also supported by good profitability in the life segment, where ZEP-RE is expanding strongly. A.M. Best anticipates that the combined general and life technical account result will grow from USD 8 million in 2015 to around USD 14 million in 2017, with the life segment contributing significantly to profit growth in 2016. The company s strategic targets relate to successfully participating in the expected strong growth of its regional markets, targeting markets with particularly strong medium term potential, growing market share where the company is under-represented and focusing on lines of business where the profit pool is attractive. Investment Results: ZEP-RE s investment earnings reflect a mix of USD and Kenyan shilling (KSh) investments which is weighted towards USD. Kenyan term bank deposits earn the company high rates of return. KSh deposits offer higher nominal returns but carry considerably more risk that value is eroded by inflation. Government bonds comprise circa 25% of investment assets whilst corporate bonds are less than 1%. Cash and bank deposits totalled 56% of investment assets at year-end 2015. Bank deposits are mostly with Kenyan banks. ZEP-RE has allowed real estate to decline as a proportion of total investments as new investments have not been made at a level to match the company s growth and the associated growth in invested assets. The asset class has delivered high returns and ZEP-RE is looking to develop a commercial real estate site in Zambia, which would lift the proportion of investments in real estate (9% at end 2015). Around 5% of assets are invested in affiliates. These are PTA Bank, reinsurance companies based in Uganda, Tanzania and Senegal, and a pan African provider of export credit and political risk insurance. Printed February 15, 2017 www.ambest.com Page 3 of 7
Investment return (measured in USD and including gains) has averaged 6% over the five year period to the end of 2015 and is expected to be in the 5-6% range over the medium term. Some downward pressure on Kenyan bank deposit rates may emerge following the implementation of more restrictive rules on bank interest charges. An independent audit of the company s affairs through December 31, 2015, was conducted by PricewaterhouseCoopers. STATEMENT OF INCOME 12/31/2014 BALANCE SHEET STRENGTH Capitalization: ZEP-RE Re s risk-adjusted capitalisation remains at an excellent level, providing support to its growing operations and expanding franchise. The company s balance sheet strength was maintained at an excellent level over 2015, driven by good earnings and a capital contribution of USD 15 million by DEG, its second largest shareholder. The capital and surplus of ZEP-RE more than tripled in the five years to the end of 2015. During this period, capital generation has been supported by both earnings retention and by the issuance of new shares to new and existing investors. New shares accounted for USD 57 million of the USD 119 million increase in capital and surplus. Shares have been issued at a premium of 50% to book value, which demonstrates the support of shareholders and a view that the company will add value to newly subscribed capital. The company plans to grow its GWP at an annual rate of approximately 20% over the coming years as it seeks to participate in the growth of its regional markets, increase penetration in core markets, expand in attractive territories where its market share is low and selectively enter new markets. ZEP-RE s ability to secure long-term private funds for share issues, combined with its sustained positive operating performance provides financial flexibility. Dividend policy has been stable. The company s current investor base remains supportive. ZEP-RE s net loss reserves to capital and surplus ratio was 29% in 2015, down from 33% a year previously reflecting a relatively subdued year for growth, the pay-down of reserves established for earthquake claims in Nepal and capital raised through shares issued in the course of the year. A.M. Best expects this ratio will trend upwards over 2017 and 2018 towards mid 30s percentages. Net written premiums as a percentage of average capital and surplus, at 69% in 2015 and down from 80% in 2014, also reflected a year of subdued growth. Expected strong growth means the ratio is expected to trend upwards to around 90% by 2018 in the absence of further capital subscriptions. Loss Reserves: The company has exhibited generally prudent reserving. Reserves have run off with redundancies each year since 2007. Reserving is carried out internally, and is reviewed externally once a year. Liquidity: A high allocation to cash and bank deposits drives very high liquidity ratios. The ratio of liquid assets to net reserves has averaged 196% over the five years to end 2015 and was 221% at end 2015. Summarized Accounts as of December 31, 2015 Data reflected within all tables of this report has been compiled from the financial statements of this company (Source: Company Financial Statement). General technical account: Gross premiums written 129,375 118,358 Reinsurance ceded 20,656 18,090 Net premiums written 108,719 100,268 Increase/(decrease) in gross unearned premiums 6,064 9,028 Reinsurers share unearned premiums 824-63 Net premiums earned 103,479 91,177 Total underwriting income 103,479 91,177 Net claims paid 28,666 42,821 Net increase/(decrease) in claims provision 28,474 6,126 Net claims incurred 57,140 48,947 Management expenses 8,601 8,316 Acquisition expenses 29,648 25,747 Net operating expenses 38,249 34,063 Other technical expenses 1,738 2,249 Total underwriting expenses 97,127 85,259 Balance on general technical account 6,352 5,918 Life technical account: Gross premiums written 9,381 7,079 Reinsurance ceded 1,865 1,459 Net premiums written 7,516 5,620 Increase/(decrease) in gross unearned premiums 719 430 Net premiums earned 6,797 5,190 Other technical income 17 14 Total revenue 6,814 5,204 Net claims paid 2,338 2,108 Net increase/(decrease) in claims provision 309 135 Net claims incurred 2,647 2,243 Management expenses 609 485 Acquisition expenses 1,907 1,285 Net operating expenses 2,516 1,770 Total expenses 5,163 4,013 Balance on long term technical account 1,651 1,191 Printed February 15, 2017 www.ambest.com Page 4 of 7
12/31/2014 Combined technical account: Gross premiums written 138,756 125,437 Reinsurance ceded 22,521 19,549 Net premiums written 116,235 105,888 Increase/(decrease) in gross unearned premiums 6,783 9,458 Increase/(decrease) in reinsurers share unearned premiums 824-63 Net premiums earned 110,276 96,367 Other technical income 17 14 Total revenue 110,293 96,381 Net claims paid 31,004 44,929 Net increase/(decrease) in claims provision 28,783 6,261 Net claims incurred 59,787 51,190 Management expenses 9,210 8,801 Acquisition expenses 31,555 27,032 Net operating expenses 40,765 35,833 Other technical expenses 1,738 2,249 Total underwriting expenses 102,290 89,272 Balance on combined technical account 8,003 7,109 Non-technical account: Net investment income 11,339 9,041 Realised capital gains/(losses) 403 127 Unrealised capital gains/(losses) -21 1,689 Exchange gains/(losses) -881 175 Other income/(expense) 1,118 565 Profit/(loss) before tax 19,961 18,706 Profit/(loss) after tax 19,961 18,706 Dividend to shareholders 4,115 3,226 Retained profit/(loss) for the financial year 15,846 15,480 Retained profit/(loss) brought forward 64,843 49,363 Retained profit/(loss) carried forward 80,689 64,843 MOVEMENT IN CAPITAL & SURPLUS 12/31/2014 Capital & surplus brought forward 143,587 105,729 Change in share capital 3,134 7,331 Change in non-distributable reserves 10,499 13,075 Currency exchange gains -528 Profit or loss for the year 19,961 18,706 Capital gains or (losses) -3,383 2,500 Dividend to shareholders -4,115-3,226 Total change in capital & surplus 26,096 37,858 Capital & surplus carried forward 169,683 143,587 ASSETS % of total 12/31/2014 Cash & deposits with credit institutions 124,352 40.0 145,833 Bonds & other fixed interest securities 57,638 18.6 9,837 Shares & other variable interest instruments 9,305 3.0 12,039 Liquid assets 191,295 61.6 167,709 Real estate 20,009 6.4 19,805 Inter-company investments 9,976 3.2 10,135 Total investments 221,280 71.3 197,649 Reins. sh. of tech. reserves - unearned premiums 7,417 2.4 6,593 Reinsurers share of technical reserves - claims 32,184 10.4 8,447 Total reinsurers share of technical reserves 39,601 12.8 15,040 Deposits with ceding companies 3,861 1.2 3,546 Insurance/reinsurance debtors 26,619 8.6 22,047 Inter-company debtors 1,343 0.4 703 Other debtors 2,031 0.7 2,168 Total debtors 29,993 9.7 24,918 Fixed assets 244 0.1 339 Prepayments & accrued income 15,485 5.0 14,164 Other assets 32 0.0 76 Total assets 310,496 100.0 255,732 Printed February 15, 2017 www.ambest.com Page 5 of 7
LIABILITIES % of total 12/31/2014 Capital 52,733 17.0 49,599 Paid-up capital 52,733 17.0 49,599 Non-distributable reserves 36,261 11.7 29,145 Retained earnings 80,689 26.0 64,843 Capital & surplus 169,683 54.6 143,587 Gross provision for unearned premiums 44,935 14.5 41,405 Gross provision for outstanding claims 81,397 26.2 56,295 Total gross technical reserves 126,332 40.7 97,700 Deposits received from reinsurers 438 0.1 352 Insurance/reinsurance creditors 5,465 1.8 7,169 Other creditors 2,916 0.9 1,837 Total creditors 8,381 2.7 9,006 Accruals & deferred income 3,151 1.0 2,839 Other liabilities 2,511 0.8 2,248 Total liabilities & surplus 310,496 100.0 255,732 MANAGEMENT Officers: Company Secretary, Jerry Sogoli; Managing Director, Hope Murera; Directors, Jephita Gwatipedza (Southern African Hub), Benjamin Kamanga (Finance), Ronald Kasapatu (Operations), Thierry Ravaoja (Western Hub); Chief Accountant, Sammy Silamoi. Directors: Mr. Tadesse Admassu, Ms. Carole Agito (Vice Chairman), Mr. William Erio (Chairman), Mr. Mohamed Mousa Idris, Mr. Thomas Kronsbein, Mr. Yaw Kuffour, Ms. Hope Murera (Managing Director), Mr. Jadiah Mwarania, Mr. Novat Niyungeko, Mr. Caleb Rwamunganza, Mr. Aden Saleh, Mr. George Silutongwe. ANALYSIS OF GROSS PREMIUMS WRITTEN USD USD USD USD USD (000) (000) (000) (000) (000) Accident & health 13,063 13,295 6,846 Automobile 9,504 8,336 6,652 7,643 6,039 Aviation 350 307 295 263 258 Casualty 25,490 26,251 20,104 21,885 16,277 Marine 11,318 10,764 9,800 9,197 7,104 Property 69,650 59,405 50,893 38,435 30,427 Total non-life 129,375 118,358 94,590 77,423 60,105 REINSURANCE The company s retrocession programme has been relatively stable during recent years, providing effective risk transfer for property, marine hull and cargo, accident and catastrophic exposures. Catastrophe retrocession cover has increased for 2016 to USD 82 million after a deductible of USD 3 million (2015 was 72.5 million after a deductible of USD 2.5 million). The credit risk profile of the reinsurance asset is satisfactory. Over 70% of the asset derives from reinsurers rated A- or higher. BALANCE SHEET ITEMS USD USD USD USD USD (000) (000) (000) (000) (000) Liquid assets 191,295 167,709 127,484 95,673 82,984 Total investments 221,280 197,649 149,720 112,518 97,423 Total assets 310,496 255,732 201,843 154,088 130,336 Total gross technical reserves 126,332 97,700 84,355 64,887 54,684 Net technical reserves 86,731 82,660 68,010 53,742 43,563 Total liabilities 140,813 112,145 96,114 75,312 63,680 Capital & surplus 169,683 143,587 105,729 78,776 66,656 INCOME STATEMENT ITEMS USD USD USD USD USD (000) (000) (000) (000) (000) Gross premiums written 138,756 125,437 100,181 81,716 63,537 Net premiums written 116,235 105,888 83,965 66,309 49,847 Balance on technical account(s) 8,003 7,109 7,275 5,277 2,398 Profit/(loss) before tax 19,961 18,706 15,363 11,681 8,777 Profit/(loss) after tax 19,961 18,706 15,363 11,681 8,777 LIQUIDITY RATIOS (%) Total debtors to total assets 9.7 9.7 9.6 11.3 9.7 Liquid assets to net technical reserves 220.6 202.9 187.4 178.0 190.5 Liquid assets to total liabilities 135.9 149.5 132.6 127.0 130.3 Total investments to total liabilities 157.1 176.2 155.8 149.4 153.0 Printed February 15, 2017 www.ambest.com Page 6 of 7
LEVERAGE RATIOS (%) Net premiums written to capital & surplus 68.5 73.7 79.4 84.2 74.8 Net technical reserves to capital & surplus 51.1 57.6 64.3 68.2 65.4 Gross premiums written to capital & surplus 81.8 87.4 94.8 103.7 95.3 Gross technical reserves to capital & surplus 74.5 68.0 79.8 82.4 82.0 Total debtors to capital & surplus 17.7 17.4 18.3 22.2 19.0 Total liabilities to capital & surplus 83.0 78.1 90.9 95.6 95.5 PROFITABILITY RATIOS (%) Loss ratio 55.2 53.7 54.9 48.9 53.8 Operating expense ratio 35.2 34.0 33.6 36.4 34.8 Combined ratio 90.4 87.7 88.5 85.3 88.6 Other technical expense or (income) ratio 1.6 2.2 2.2 1.7 1.9 Net investment income ratio 11.0 9.9 9.5 14.0 11.5 Operating ratio 81.0 80.0 81.2 73.1 79.0 Benefits paid to net premiums written (Life) 35.2 39.9 8.6 61.4 86.4 Expense ratio (Life) 33.5 31.5 28.8 31.7 27.2 Return on net premiums written 17.2 17.7 18.3 17.6 17.6 Return on total assets 7.1 8.2 8.6 8.2 7.5 Return on capital & surplus 12.7 15.0 16.7 16.1 15.0 Why is this Best s Rating Report important to you? The A.M. Best Company is the oldest, most experienced rating agency in the world and has been reporting on the financial condition of insurance companies since 1899. contract or any other financial obligation issued by an insurer, nor does it address the suitability of any particular policy or contract for a specific purpose or purchaser. A Best's Financial Strength Rating (FSR) is an independent opinion of an insurer's financial strength and ability to meet its ongoing insurance policy and contract obligations. An FSR is not assigned to specific insurance policies or contracts and does not address any other risk, including, but not limited to, an insurer's claims-payment policies or procedures; the ability of the insurer to dispute or deny claims payment on grounds of misrepresentation or fraud; or any specific liability contractually borne by the policy or contract holder. An FSR is not a recommendation to purchase, hold or terminate any insurance policy, The company information appearing in this pamphlet is an extract from the complete AMB Credit Report. You may obtain the complete report by contacting Customer Service at +1(908)439-2200 or customer_service@ambest.com. Please reference the company's identification number (AMB#) listed on this rating report. For the latest Best's Financial Strength Ratings along with their definitions and A.M. Best's Terms of Use, please visit www.ambest.com. Copyright 2017 A.M. Best Company, Inc. and/or its affiliates. All rights reserved. No part of this report may be reproduced, distributed, or stored in a database or retrieval system, or transmitted in any form or by any means without the prior written permission of the A.M. Best Company. While the data in this report was obtained from sources believed to be reliable, its accuracy is not guaranteed. Printed February 15, 2017 www.ambest.com Page 7 of 7