[August 28, 2015]

A.M. Best Revises Issuer Credit Rating Outlook to Positive for National General Insurance Corporation (NAGICO) N.V. and Nagico Insurance Company Limited

Best has revised the outlook for the issuer credit ratings (ICR) to positive from stable and affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit ratings of "bbb" of National General Insurance Corporation (NAGICO) N.V. (NV) (St. Maarten) and Nagico Insurance Company Limited (NICL) (Anguilla), collectively referred to as NAGICO. The outlook for the FSR remains stable.

The ratings reflect NV and NICL's overall profitability and NAGICO's strong market presence in its domestic market. NV is the leading property/casualty insurer in St. Maarten with a dominant market share in the Dutch Caribbean, while NICL has a strong market presence in several overseas markets. Also reflected in the ratings is the common ownership and shared systems of NV and NICL. NV and NICL have experienced strong, organic surplus growth through retained earnings, which has been derived from positive overall earnings and minimal dividend requirements.

The revised ICR outlook reflects NAGICO's improved levels of risk-adjusted capitalization as well as positively trending consolidated underwriting results despite losses from Hurricane Gonzalo in October 2014. Additional positive rating factors include a broader reinsurance program with a lower net retention on the group catastrophe program as well as the continued enhancement and maturity of the group's enterprise risk management efforts.

In July 2015, it was announced that Nagico Holdings Limited (NHL), the parent company of NAGICO, entered into a definitive agreemen with Peak Reinsurance Company Limited (Peak Re) where Peak Re would acquire a 50% stake in NHL. The agreement is expected to benefit NAGICO in the short term in the form of reinsurance support and medium to long term in functional areas such as corporate governance and investment management.

Partially offsetting these positive rating factors are NV and NICL's rapid growth phase, which the group is in the process of winding down, and the highly competitive regional markets in which both companies operate. Additionally, NAGICO and NICL, like other Caribbean insurers, have significant exposure to catastrophic losses. Both companies manage this risk through the utilization of reinsurance to limit their catastrophe exposure to a manageable level and to effectively protect their surplus.

Factors that could contribute to positive rating actions include sustained improvement in NV and NICL's underwriting performance, stabilized risk-adjusted capitalization at both operating companies, consistent long-term overall profitability and an upgrade in St. Maarten and Anguilla's country risk tier ratings.

Factors that may lead to negative rating actions include significant loss of domestic market share, a sustained decline in underwriting profitability, material deterioration in risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio (BCAR), outsized catastrophic loss relative to peers and a downgrade in St. Maarten and Anguilla's country risk tier ratings.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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