A.M. Best Affirms Rating of The Wawanesa Mutual Insurance Company, Downgrades Ratings...

A.M. Best Affirms Rating of The Wawanesa Mutual Insurance Company, Downgrades Ratings of Wawanesa General Insurance Company

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A+ (Superior) and downgraded the issuer credit ratings (ICR) to "aa-"
from "aa" of The Wawanesa Mutual Insurance Company (Wawanesa Mutual)
(Winnipeg) and Wawanesa Mutual Insurance Company USB (WMICUSB) (San
Diego, CA). The outlook for the above ratings is stable.

A.M. Best also has downgraded the FSR to A (Excellent) from A+
(Superior) and ICR to "a" from "aa-" for Wawanesa Mutual's wholly
owned property/casualty subsidiary, Wawanesa General Insurance Company
(Wawanesa General) (San Diego, CA). The outlook for these ratings has
been revised to stable from negative.

Additionally, A.M. Best has affirmed the FSR of A (Excellent) and
ICR of "a" of Wawanesa Mutual's wholly owned life/health subsidiary,
Wawanesa Life Insurance Company (Wawanesa Life) (Winnipeg). The
outlook for these ratings is stable.

The ratings of Wawanesa Mutual primarily are based on its
longstanding superior capitalization, above average balance sheet
liquidity, profitable operating performance, strong broker relations,
prominent market position and geographic diversification. The ICR
downgrades primarily are a result of lower capitalization over the
last two years from diminishing earnings. Additionally, the company
faces several challenges due to its exposure to the volatile Alberta
and Ontario automobile markets as well as greater investment earnings
volatility. However, despite the downgrade, A.M. Best believes
Wawanesa Mutual will maintain its superior financial strength as it
continues to successfully manage these significant challenges.

Wawanesa General's downgrades are reflective of its lower
risk-adjusted capitalization and weaker operating performance, which
were not consistent with its prior ratings. The current ratings also
take into consideration its competitive marketing strategies as a
direct writer in the California personal auto and property markets and
the explicit financial support provided by Wawanesa Mutual.

The ratings of Wawanesa Life recognize its strong risk-adjusted
capital position, profitable operations and the support it receives
from Wawanesa Mutual through shared management, operating platforms
and common customer base as well as expanded distribution through
managing general agents. Wawanesa Life's ability to grow new market
share will remain challenged as it continues to compete in markets
dominated by considerably larger companies, which have significant
economies of scale that help to drive down unit costs.

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.

A.M. Best Co.
Analysts
Charles M. Huber, 908-439-2200, ext. 5122
charles.huber@ambest.com
or
Joseph A. Burtone, 908-439-2200, ext. 5125
joseph.burtone@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2008