The African insurance and reinsurance market offers potential for growth, given

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1 BEST S SPECIAL REPORT Our Insight, Your Advantage. Africa Non-Life & Life Market Review January 21, 2013 Drivers range from energy industries to increasing populations. Africa s Diverse Insurance Markets Offer Growth Opportunities, Untapped Demand The African insurance and reinsurance market offers potential for growth, given the economic development in the region. Each country has different drivers for heightened insurance demand, ranging from economies dominated by the oil and gas and mining industries, to large populations. Insurance markets in Africa s 54 countries are diverse, reflecting disparities in economic conditions and the approaches of policymakers in individual countries and regional blocs. Countries with stronger economies often driven by the energy sector and mining have enjoyed greater demand for insurance, while affordability remains an issue in poorer African countries. Various factors and commonalities between some of these countries have encouraged a number of regional and pan-african initiatives and relationships among some market participants. Insurance penetration in Africa is growing, but from a very low base. Insurers are attempting to make insurance more accessible through microinsurance and, to a lesser extent in certain countries, through Takaful product offerings that comply with Islamic Shari a law. Insurers are exploring new distribution methods for personal lines, driven by expanding use of mobile telephones. Insurers and reinsurers face challenges that include competitive environments. Increases in minimum capital levels have resulted in some consolidation across the industry, although A.M. Best still considers some markets to be crowded. The ongoing global financial uncertainty and political risk in many parts of the region also present challenges in the form of volatile investment portfolios. A.M. Best has examined three of Africa s largest insurance markets and notes: Analytical Contact Carlos Wong-Fupuy, London Carlos.Wong-Fupuy@ ambest.com Researcher & Writer Yvette Essen, London Editorial Management Brendan Noonan, Oldwick The South African insurance market reflects its mature life insurance sector and its developed economic base. Some large domestic insurers are increasingly seeking to diversify outside of South Africa and, in certain instances, beyond Africa. Exhibit 1 Africa Non-Life & Life Markets Key Indicators (USD Billions) Non-Life % of Total Premium Total Premium as % of 2011 GDP Population (Millions) Inflation (%) World Ranking Country 2011 Premium % Change 2011 GDP South Africa USD USD Morocco Egypt Nigeria Algeria Kenya Total Top 6 USD USD 1, n/a n/a Total Africa USD USD 1,879.0 n/a n/a n/a n/a Source: Swiss Re, sigma No 3/2012; International Monetary Fund, World Economic Outlook Database (October 2012); and A.M. Best research Copyright 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED. No part of this report or document may be distributed in any electronic form or by any means, or stored in a database or retrieval system, without the prior written permission of the A.M. Best Company. For additional details, refer to our Terms of Use available at the A.M. Best Company website:

2 Nigeria has the biggest insurance market in West Africa, as the oil and gas industry has fuelled economic development and demand for energy infrastructure projects. The insurance market has seen consolidation driven primarily by higher capital requirements, although A.M. Best believes there is room for further mergers and acquisitions. Kenya hosts the largest East African insurance market, although (re)insurers have faced significant challenges, including lower investment earnings, largely as a consequence of volatile equity markets and high inflation. Competition is intense, owing to government-related clients enjoying strong negotiating positions. Africa s Insurance and Reinsurance Markets Overview The African insurance market is relatively concentrated, with premiums from South Africa, Morocco, Egypt, Nigeria, Algeria and Kenya representing 89.2% of total non-life and life premium on the continent in 2011 (see Exhibit 1). South Africa is by far the largest insurance market in this region, with total premium of USD 52.4 billion in An insurance market s maturity can be gauged by examining proxies, including the size of the life sector, the balance in terms of lines of business and the extent to which motor dominates the non-life sector. South Africa stands out as 79.3% of its total insurance premium originates from life risks. The strong demand for life business results in total insurance premiums in South Africa representing 12.9% of gross domestic product (GDP) well exceeding insurance penetration in some European countries. Kenya and Morocco have the next highest levels of insurance penetration on the continent (3.2% and 2.9% respectively), which is comparable to markets such as Brazil and China. The rest of Africa has very low demand for insurance. In particular, Nigeria and Egypt are considered underinsured, given their large populations of 165 million and 82 million. Demand for insurance in Africa has continued to increase in line with economic growth. The six largest insurance markets in Africa saw total premium increase 7.8% in 2011 to USD 60.7 billion, with Nigeria and Morocco experiencing double-digit percentage growth. Insurance markets are growing from a low base, although they are still expanding at a faster rate than more developed markets. Egypt has been an exception, with a 0.4% contraction in total premium owing to the unstable political situation after the removal of President Hosni Mubarak from office in February African insurance markets offer potential for further growth, given anticipated development of GDP in the region. A number of subregional initiatives on the continent seek to promote development of the African insurance industry, including the West African Insurance Companies Association (WAICA). Insurance institutions in the five Englishspeaking West African countries Gambia, Sierra Leone, Liberia, Ghana and Nigeria founded the association in WAICA has converted its WAICA Reinsurance Pool to a fully fledged, subregional reinsurance company. Globus is another network, with more than 30 insurance company members, created by African countries to help drive shared interests and business. Meanwhile, the African Insurance Organisation (AIO) a nongovernmental organisation recognised by many African governments aims to promote inter-african cooperation and the development of the (re)insurance sector on the continent. It has been working to enhance insur- 2

3 ance penetration and promote economic development through alternative risk transfer mechanisms. A few African countries are examining Takaful opportunities, as it is estimated that more than one-third of the sub-saharan African population is Muslim. However, Takaful does not necessarily generate a new market, but rather Shari a products often compete with conventional insurance, as experienced by Takaful operators in the Middle East. Some insurers are introducing microinsurance offerings as they provide coverage to economic classes that would traditionally be unable to afford conventional insurance. Nevertheless, typically costs per unit are high, with very low margins. Any initiative in microinsurance usually requires a public-private partnership or cooperation with an organisation to support a particular affinity group. African Rating Trends Reinsurers in Africa have been leading the demand for ratings as they seek greater international diversification (see Exhibit 2). Exhibit 2 Africa Insurance & Reinsurance A.M. Best Rated Companies Ratings as of Jan. 9, (USD Thousands) Country of Best's Financial 2011 Premiums Written Retention Company AMB # Domicile Strength Rating Gross Net Ratios (%) Compagnie Centrale de Reassurance Algeria B+ USD 178, USD 99, Ghana Reinsurance Co. Ltd Ghana B 30,290 28, East Africa Reinsurance Co. Ltd Kenya B 25,741 22, Kenya Reinsurance Corp. Ltd Kenya B+ 79,102 74, ZEP-RE (PTA Reinsurance Co.) Kenya B+ 63,537 49, Societe Centrale de Reassurance Morocco B++ 357, , African Reinsurance Corp Nigeria A- 631, , Continental Reinsurance Plc Nigeria B+ 73,039 64, Custodian & Allied Insurance Plc Nigeria B 63,093 29, Leadway Assurance Co. Ltd Nigeria B- 151,042 89, Mansard Insurance Plc Nigeria B 62,740 42, General Reinsurance Africa Ltd South Africa A++ 196, , Societe Tunisienne de Reassurance Tunisia B+ 47,178 23, Source: Statement File Global Direct insurers require ratings in part to enable underwriting of large contracts, many related to oil and gas or infrastructure projects. These include Custodian & Allied Insurance, Leadway Assurance and Mansard Insurance (formerly Guaranty Trust Assurance), all in Nigeria. These direct insurers tend to have relatively low retention levels, especially in respect of energy risks, owing to their relatively modest size and capitalisation compared with international standards. African reinsurers have higher retention ratios in their roles as national or regional reinsurers. General Reinsurance has the highest retention ratio for an A.M. Best-rated African company at 96.4%, reflecting in part the financial support provided by the group s ultimate parent, Berkshire Hathaway Inc. A.M. Best uses its country risk methodology and model to assess country-specific factors that influence the credit quality of insurers operating in a given country. Country risk is the risk that country-specific factors could adversely affect an insurer s ability to 3

4 meet its financial obligations. These risks are categorised into political, economic and financial system risks. The five tiers for countries range from Country Risk Tier 1 (CRT-1), denoting a stable environment with the least amount of risk, to Country Risk Tier 5 (CRT-5) for countries that pose the most risk and the greatest challenge to an insurer s financial stability, strength and performance. Exhibit 3 Africa Insurance & Reinsurance Country Risk Tiers Country South Africa Morocco Tunisia Algeria Egypt Ghana Kenya Libya Country Risk Tier CRT-3 CRT-4 CRT-4 CRT-5 CRT-5 CRT-5 CRT-5 CRT-5 Exhibit 3 displays the CRTs for African countries. The majority of African countries are categorised as CRT-5, with the exception of South Africa (CRT-3) and Morocco and Tunisia (both CRT-4). In September 2011, Egypt was recategorized from CRT-4 to CRT-5. A.M. Best expects political uncertainty associated with the revolution and the building of a new political system to continue to weigh heavily on the Egyptian economy into Nigeria CRT-5 Country risk factors affect all companies in a given market, but to differing Source: A.M. Best degrees (see A.M. Best Clarifies the Risk Weighting Given to Sovereign Creditworthiness in Assigning Insurer FSRs, 8 November, 2012). Many of these risks can be hedged or lessened through diversification, and A.M. Best therefore does not impose a country risk ceiling on ratings, but rather looks at how these risks specifically affect an insurer s credit quality. To impose a ceiling on insurer ratings based on the sovereign debt rating is inappropriate, as it ignores meaningful risk management activity at the company level and international diversification. Central to A.M. Best s rating methodology is the ability to differentiate levels of risk exposure among competing insurers in a given market. For this reason, rather than applying a blanket sovereign ceiling to all insurers in a country, A.M. Best uses a stresstesting approach. Consequently, ratings of some African (re)insurers can be slightly above those for the equivalent sovereign ratings of the countries. For instance, in South Africa, A.M. Best takes into account the support provided by General Re s large, international parent company. General Re has a Financial Strength Rating (FSR) of A++, which is the highest FSR possible. Nigeria has a CRT-5 classification, although regional reinsurer African Reinsurance Corp., which is domiciled in the country, has a FSR of A-. This reflects its assetliability matching strategy and geographical diversification. Continental Reinsurance has a B+ rating, given its large capital base and growth opportunities mainly within Nigeria, and through diversification in Francophone West Africa, East Africa and North Africa. South Africa Overview Any review of the African insurance market inevitably is skewed by the relative status of South Africa, which is by far the largest insurance market in Africa as a result of its 4

5 sophisticated financial services sector and self-sufficient economy. Its developed economic base represents an estimated 22% of total GDP in Africa. Without South Africa, total insurance penetration would be 1.1%, compared with 3.6% when including the country (see Exhibit 1). According to Swiss Re s Sigma, South Africa had the third-highest total insurance penetration in the world in 2011, after Taiwan and the Netherlands. The mature life insurance market reflects the state s limited role as a provider of social benefits. Consequently, large employers in the formal jobs sector are key providers of life and pension plans, offering relatively sophisticated products comparable to those available in Europe. In the non-life sector, the state is responsible for running motor third-party liability (MTPL) and workers compensation schemes. Even when excluding MTPL premium, motor represents more than 40% of non-life premiums. A.M. Best believes earnings are strong for some companies, although competitive pressures in the property/casualty sector are resulting in reduced underwriting margins and challenging market conditions. The insurance market is relatively concentrated, with leader Santam controlling 23% of the non-life sector, and Mutual & Federal holding a market share of 11%. Both companies are associated with life companies Santam is 60% owned by Sanlam Group, which also offers life products, while Old Mutual owns Mutual & Federal. Insurers are commonly part of larger financial groups, many of which have been expanding outside South Africa and in some instances, beyond Africa. Old Mutual has several interests in Africa (including in Botswana, Namibia and Zimbabwe), as well as in Europe (Skandia). Hollard Insurance Group, South Africa s largest privately owned insurance group comprising Hollard Insurance Co. and Hollard Life Assurance Co., is concentrating on partnerships in the Southern African Development Community (SADC), Australia, China, India and Pakistan. In December 2012, Sanlam purchased a 49% stake in Malaysian insurer Pacific & Orient Insurance Co. Berhad. However, A.M. Best envisages overseas expansion primarily for the larger South African companies as they seek relief from regulatory and political pressures and foreign currency controls. There is some foreign participation in South African financial companies. In December 2012, Barclays Bank increased its stake in Absa Group from 55.5% to 62.3%. While most of the international reinsurers are active in the country, challenges include achieving scale. Meanwhile, South African company Royal Bafokeng Finance is participating in Zurich South Africa through a 25.1% shareholding. South African insurers tend to post positive margins, although technical profit margins are moderate. Relatively prudent investment policies are generally followed, although A.M. Best believes insurers may need investment opportunities in different asset classes, given the low interest rate environment. South Africa has a relatively well-developed insurance regulatory regime, encouraging the development of microinsurance. The insurance regulator, the Financial Services Board (FSB), is developing a new, risk-based regulatory regime, modelled 5

6 on the principles of the European Union s Solvency II directive. The Solvency Assessment and Management regime (SAM) is scheduled to take effect in January A.M. Best believes this timetable could be affected by the delayed implementation of Solvency II in Europe, as South Africa s regime was to be based on Solvency II, adjusted to account for local conditions. Nigeria Overview Nigeria has the largest insurance market in Western Africa, with total premium of USD 1.6 billion in 2011, although insurance penetration is modest at 0.6%. The Pension Reform Act, which makes pension insurance compulsory for companies employing more than five people, is likely to drive further growth in premium. A.M. Best considers the development of the life portfolio as positive for insurers diversification, although management teams may need to demonstrate their skills in these new areas. Exhibit 1 shows that the non-life sector accounted for 74% of total premium in 2011, with drivers including the enforcement of compulsory lines of business such as MTPL, professional indemnity, public and general liability. Motor risks make up more than a quarter of non-life premium in Nigeria at a lower level than in South Africa. This reflects the country s oil and gas risks, which result in very volatile growth in gross premiums written (GPW) and low retention ratios. There are mandatory requirements for the domestication of a large portion of oil and gas risks in Nigeria before transferring these risks internationally. The Local Content Act 2010 effectively states that 70% of all business coming out of the oil and gas sector must be insured in Nigeria for example, engineering, building of infrastructure and insurance needs. Therefore, local insurers are expected to absorb 70% of all risks arising out of the oil and gas segment. Insurance buyers are attempting to exhaust the local capacity before placing insurance business overseas. However, A.M. Best considers the 70% minimum retention requirement impractical, given that local insurers do not have the expertise, technical know-how or capital to support these large oil risk exposures. The insurance regulator, the National Insurance Commission (NAICOM), is aware that domestic insurers effectively act as fronting companies, transferring a substantial amount of the gross risks through the use of reinsurance, mainly to international reinsurers. Foreign participation is relatively low in the insurance sector, as NAICOM does not permit foreign companies to own more than 40% of a Nigerian company, although this limit is not strictly observed. Nigeria s insurance market remains crowded, although the sector has seen significant consolidation from 104 companies in 2006 to 18 life insurers, 33 non-life insurers, nine composite companies and two reinsurers in 2012, according to NAI- COM. In 2007, NAICOM issued requirements to increase industry participants minimum regulatory capital levels. While some companies increased their levels of paid-up capital, others were unable to raise additional funds and ceased trading. Some companies still need to develop appropriate business plans to deploy increased capital. 6

7 The financial crisis also contributed to merger and acquisition activity, as the Central Bank of Nigeria passed a directive ordering all deposit money banks to divest their nonbanking interests or form a holding company structure. For example, Mansard Insurance (formerly Guaranty Trust Assurance) was a subsidiary of Guaranty Trust Bank until 2011, when Assur Africa Holding purchased GT Bank s 67.7% holding. However, A.M. Best believes there is still potential for further consolidation. Nigeria s insurance market remains fragmented, with only two non-life companies Leadway Assurance Co. and Custodian & Allied maintaining market shares of more than 10%. The small size of companies and the nature of the risks underwritten can lead to relatively high and volatile expense ratios. In addition to facing competition, Nigerian (re)insurers are encountering other operating challenges. A.M. Best notes insurers in Africa can take considerably longer than those elsewhere to close their annual accounts a practice that is being discouraged in Nigeria. In October 2012, the Nigerian Stock Exchange fined six quoted insurance companies for offences including failure to file their accounts on time and publishing audited accounts without approval. The federal government of Nigeria has mandated that all publicly listed companies adopt International Financial Reporting Standards (IFRS). This should improve the transparency of listed companies. Nigeria is subject to very high political, economic and financial system risks. Riskadjusted capital positions remain under pressure from volatile domestic capital markets. A.M. Best expects that for some companies, investment performance will remain subject to significant volatility, given their high holdings in equities and unquoted securities. The high level of receivables is a chronic issue in Nigeria, with (re)insurers commonly having to make write-offs and provisions for bad and doubtful accounts. A change in regulatory requirements stipulates a provision of 50% of all premiums outstanding to be established after 90 days, increasing to 100% after 180 days. Previously, provisions were made for all premiums outstanding at each quarter of 25%, 50% and 75%, respectively, climbing to 100% after one year. A.M. Best will continue to monitor companies credit control measures and how they update provisions for bad debt on their balance sheets. In Nigeria, commercial business is predominantly broker generated. Distribution methods are changing for noncommercial risks, with insurers seeking innovative and new approaches such as the growth in mobile phone money transfers. Other methods of distribution include online platforms for personal lines products. Kenya Overview Total insurance premiums in Kenya reached USD 1 billion in 2011, with total insurance penetration of 3.2% making the country East Africa s largest insurance market. Kenya has rolled out some initiatives for microinsurance and Takaful. Kenyan (re)insurers have faced changes in recent years. Kenya established the Insurance Regulatory Authority (IRA) as the new insurance regulator in 2007 with the Insurance (Amendment) Act Following the act, Kenyan (re)insurers were 7

8 required to meet higher minimum capital requirements (MCRs). Recent, significant challenges have included high political, economic and financial system risks, and the collection of premiums remains an issue for the market. The inflationary environment in Kenya throughout 2011 when inflation reached an estimated 18.6% and the subsequent increase in interest rates affected results. High realised and unrealised investment losses resulted from the significant decline in equity markets caused by the increase in interest rates. A.M. Best expects the economic environment to remain volatile. Inflation fell in 2012 to an estimated 7%. Insurers have faced pressure on their capital positions owing to a volatile stock market. A.M. Best expects the industry to experience consolidation, given these pressures. Kenya s insurance market is very competitive, in part as the main insurance buyers tend to be government-related bodies. These entities are obligated to accept cover based on pricing as opposed to terms and conditions. Insurers therefore face pressure on margins. Non-life risks are commonly broker-sourced, with the top three brokers generally having access to better quality business. Increasing competition from regional and international reinsurers continued in Foreign participation in Kenyan risks is mainly from regional financial groups from Eastern and Southern Africa, or India where there are cultural links. For example, General Insurance Corporation of India has a 14.8% stake in East Africa Re. In 1979, four Indian insurance companies operating in Kenya merged to form Kenindia Assurance Co. There is little visible foreign participation from large, Western players. Recent legislation has restricted the maximum shareholding by any one party in an individual institution to 25% of paid-up share capital. As is common with other emerging insurance markets, there are compulsory cessions for reinsurance risks in Kenya. Kenya Reinsurance Corp. Ltd., which is partially privatised and 60% controlled by the Kenyan government, is supported by compulsory cessions obliging insurers in the Kenyan market to cede 18% of all treaty business written to the company. ZEP-RE (also known as PTA Reinsurance) is a regional reinsurer created in 1992 by an agreement of heads of state and governments of the Common Market for Eastern and Southern Africa (COMESA) countries. Cedants in its core markets of Kenya, Uganda and Tanzania must place 10% of treaty business with the company before ceding risks with other reinsurers. Meanwhile, Africa Re receives a legal cession of 5% on all reinsurance treaties from insurance companies operating within its member states. Reinsurers tend to have material voluntary business, in addition to compulsory risks. The legal cessions in both the local and regional markets, and the greater economies of scale enjoyed by the larger reinsurers, limit rival reinsurers competitive positions and constrain their ability to increase market share. A.M. Best expects compulsory cessions to be phased out in the coming years, although there is no clear timetable for the liberalisation of the market. A.M. Best notes it is common in Kenya for reinsurers to enter reciprocal business arrangements, regardless of the credit quality or the financial strength of young counterparties. 8

9 Africa Re s Position in the African Market African Reinsurance Co. occupies a distinct role in Africa s insurance market, promoting the growth and retention capacities of the sector and supporting African economic development. In A.M. Best s special report, Reinsurers Show Resilience Under Weight of Catastrophes, Economic Woes, 3 September 2012, Africa Re was ranked the 46th largest global reinsurance group based on GPW in Domiciled in Lagos and established in 1976, Africa Re maintains a strong competitive position throughout the African reinsurance market, underpinned by its long-standing relationships with stakeholders within the insurance market and the benefit of its shareholding structure. Its shareholders include African member governments, development financial institutions and more than 100 other African (re)insurers. IRB-Brasil Re, the leading reinsurer in Brazil, became a shareholder of Africa Re in All insurance companies in every member state must offer 5% of all treaty business to Africa Re, although it has the right to refuse risks. However, the majority of Africa Re s business originates from voluntary cessions. A.M. Best anticipates the proportion of voluntary business to have represented approximately 90% of its GPW in Africa Re has an A.M. Best Financial Strength Rating of A-. 9

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12 Published by A.M. Best Company Special Report Chairman & President Arthur Snyder III Executive Vice President Larry G. Mayewski Executive Vice President Paul C. Tinnirello Senior Vice Presidents Manfred Nowacki, Matthew Mosher, Rita L. Tedesco, Karen B. Heine A.M. Best Company World Headquarters Ambest Road, Oldwick, N.J Phone: +1 (908) WASHINGTON OFFICE 830 National Press Building th Street N.W., Washington, D.C Phone: +1 (202) MIAMI OFFICE Suite 949, 1221 Brickell Center Miami, Fla Phone: +1 (305) A.M. Best Europe Rating Services Ltd. A.M. Best Europe Information Services Ltd. 12 Arthur Street, 6th Floor, London, UK EC4R 9AB Phone: +44 (0) A.M. Best asia-pacific LTD. Unit 4004 Central Plaza, 18 Harbour Road, Wanchai, Hong Kong Phone: A.M. BEST MENA, SOUTH & CENTRAL ASIA Office 102, Tower 2 Currency House, DIFC PO Box , Dubai, UAE Phone: Copyright 2013 by A.M. Best Company, Inc., Ambest Road, Oldwick, New Jersey ALL RIGHTS RESERVED. No part of this report or document may be distributed in any electronic form or by any means, or stored in a database or retrieval system, without the prior written permission of the A.M. Best Company. For additional details, see Terms of Use available at the A.M. Best Company Web site Any and all ratings, opinions and information contained herein are provided as is, without any expressed or implied warranty. A rating may be changed, suspended or withdrawn at any time for any reason at the sole discretion of A.M. Best. A Best s Financial Strength Rating is an independent opinion of an insurer s financial strength and ability to meet its ongoing insurance policy and contract obligations. It is based on a comprehensive quantitative and qualitative evaluation of a company s balance sheet strength, operating performance and business profile. The Financial Strength Rating opinion addresses the relative ability of an insurer to meet its ongoing insurance policy and contract obligations. These ratings are not a warranty of an insurer s current or future ability to meet contractual obligations. The rating 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. A Financial Strength Rating is not a recommendation to purchase, hold or terminate any insurance policy, 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 Debt/Issuer Credit Rating is an opinion regarding the relative future credit risk of an entity, a credit commitment or a debt or debt-like security. It is based on a comprehensive quantitative and qualitative evaluation of a company s balance sheet strength, operating performance and business profile and, where appropriate, the specific nature and details of a rated debt security.credit risk is the risk that an entity may not meet its contractual, financial obligations as they come due. These credit ratings do not address any other risk, including but not limited to liquidity risk, market value risk or price volatility of rated securities. The rating is not a recommendation to buy, sell or hold any securities, insurance policies, contracts or any other financial obligations, nor does it address the suitability of any particular financial obligation for a specific purpose or purchaser. In arriving at a rating decision, A.M. Best relies on third-party audited financial data and/or other information provided to it. While this information is believed to be reliable, A.M. Best does not independently verify the accuracy or reliability of the information. A.M. Best does not offer consulting or advisory services. A.M. Best is not an Investment Adviser and does not offer investment advice of any kind, nor does the company or its Rating Analysts offer any form of structuring or financial advice. A.M. Best does not sell securities. A.M. Best is compensated for its interactive rating services. These rating fees can vary from US$ 5,000 to US$ 500,000. In addition, A.M. Best may receive compensation from rated entities for nonrating related services or products offered. A.M. Best s special reports and any associated spreadsheet data are available, free of charge, to all BestWeek subscribers. On those reports, nonsubscribers can access an excerpt and purchase the full report and spreadsheet data. Special reports are available through our Web site at or by calling Customer Service at (908) , ext Some special reports are offered to the general public at no cost. For press inquiries or to contact the authors, please contact James Peavy at (908) , ext SR