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 favorable 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 members.
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.
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Assistant Vice President, Public Relations