A.M. Best Takes Various Rating Actions on Amedex Insurance Company and Amedex Insurance Company

Business Wire, Sept 24, 2007

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and assigned an issuer credit rating (ICR) of "a-" to Amedex Insurance Company (Amedex-US) (Miami, FL). A.M. Best has also downgraded the FSR to B (Good) from A- (Excellent) and assigned an ICR of "bbb" to Amedex Insurance Company (Bermuda) Ltd. (Amedex-Bermuda) (Hamilton, Bermuda). The outlook for Amedex-US' FSR is being revised to negative from stable. The outlook for Amedex-Bermuda's FSR is negative, and the outlook assigned to the ICRs is negative.

The ratings of Amedex-US recognize its volatile operating results, including a significant statutory loss in 2006 and the reduced level of capitalization on an absolute and risk-adjusted basis. The operating loss primarily resulted from reserve strengthening, following a formal management review of claims per policy from its new parent company, British United Provident Association (BUPA), especially in regions that had been experiencing rapid growth. Rate increases have been implemented based on regional results; however; Amedex-US' financial results continue to fluctuate in 2007. The ratings also acknowledge Amedex-US' favorable liquidity, niche in the Latin American and Caribbean major medical markets and the improved financial discipline from its parent company. A.M. Best believes Amedex-US will continue to face execution risk in profitably as it grows in the Latin American and Caribbean major medical markets.

The downgrading of Amedex-Bermuda's rating reflects A.M. Best's concerns with its modest risk-adjusted capital position and the significant loss it posted in 2006. The weak capitalization -- relative to its ratings -- recognizes the continued increase in the level of intangible assets (deferred acquisition costs [DAC]) relative to capital and will require capital injection in addition to the capital contribution of $3.5 million from the parent during 2006. The $2.2 million net loss in 2006 resulted from a reserve adjustment on term life business and a write-down of DAC. Despite this write-down, DAC significantly increased during 2006 due to new business production. The negative outlook on the ratings reflects A.M. Best's expectation that Amedex-Bermuda's capitalization will remain low, given the level of expected business growth.

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.