BEST’S SPECIAL REPORT

Germany Non-Life & Life

Our Insight, Your Advantage.

Market Review October 13, 2014

A.M. Best expects improvements in lines such as motor and property.

German Insurers Resilient, But Continue to Face Headwinds German insurers have remained resilient, even in the face of numerous challenges that have affected the insurance industry. For the non-life sector, these include protracted, historically low interest rates; extreme weather-related flood losses in central Europe, most of which were sustained in Germany; and isolated record-level hail losses severely impacting performance in 2013. A struggling life sector meanwhile is coping with high guarantees on traditional life policies and the need to develop and introduce new, alternative products. While Germany’s economy is among the strongest in Europe, the insurance market will continue to cope with a number of pressure points. The low interest rate environment creates ongoing challenges throughout the insurance market, resulting in very low domestic bond yields and lacklustre investment income for both life and non-life sectors. The 10-year German bond yield dipped to just below 1% in September, lower than during the sovereign debt crisis, compared with almost 2% a year ago. Concomitantly, two-year German yields have now turned very slightly negative as a result of fresh cuts in interest rates and stimulus by the European Central Bank (ECB) to aid the Eurozone’s struggling economy. Against this backdrop, A.M. Best has continued to stress test the balance sheets of rated companies against deterioration in the investment markets. On the positive side, in parallel with low bond yields is a resilient domestic economy – underpinned by a strong export surplus and resilient internal consumer demand – that has avoided the financial turmoil and economic uncertainty that have plagued some of its Eurozone neighbours. Though slowing marginally in the second quarter, the German economy has continued to grow and remains a pillar of strength within the Eurozone. In April 2014, the International Monetary Fund (IMF) forecast that Germany’s gross domestic product would increase by 1.7% in 2014 and 1.6% in 2015, following lower rates of growth of 0.5% in 2013 and 0.9% in 2012. Despite a poor underwriting year in 2013 due to record non-life catastrophe losses, the German insurance industry has remained resilient. If not the most profitable insurance market in Europe, Germany is among the most stable and mature, with high penetration rates. In 2013, total premiums in the German insurance sector increased 3.0% to EUR 187.1 billion from EUR 181.6 billion in 2012, according to data from Gesamtverband der Deutschen Versicherungswirtschaft (GDV) (see Exhibit 1). Despite historically depressed returns on life products, lapse rates were at their lowest ever in 2013. This highlights the importance of insurance even during more difficult times. The GDV expects somewhat moderate premium growth in 2014.

Analytical Contacts

The Impact of Natural Catastrophes in 2013

Charlotte Vigier, London +44 20 7397 0270 [email protected]

The non-life sector was negatively impacted by extensive flooding in central Europe from late May to June 2013, which extended to eastern and southern Germany. This was followed by isolated hailstorms in summer to early autumn. From an insurance losses perspective, the storms hit the industry harder than the flooding and resulted in one of the costliest natural disasters for the German insurance industry. According to current estimates, insurers paid EUR 7 billion for floods, storms and hail in 2013, with property and motor insurance accounting for losses of approximately EUR 5.5 billion and EUR 1.5 billion, respectively. The June 2013 flooding produced losses in the region of EUR 1.8 billion, while subsequent German

Stefan Holzberger, London +44 20 7397 0288 [email protected]

Researcher and Writer Richard Micchelli

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Special Report

Germany Non-Life & Life

Exhibit 1 Germany Non-Life & Life – Key Market Statistics Indicator 2008 Population (Millions) 82.0 Gross Domestic Product (EUR Billions) 2,473.8 Change in Real GDP (%) 0.8 Inflation (%) 1.1 Unemployment Rate (%) 7.5 Insurance Penetration (%) Life 3.22 Health 1.23 Non-Life 2.21 Total 6.65 Insurance Premiums Written (EUR Billions) Life 79.59 Health 30.33 Non-Life 54.62 Total 164.54 Change in Total Premium Volume (%) 0.99

2009 2010 2011 2012 2013 81.8 81.8 80.3 80.5 80.8 2,374.2 2,495.0 2,609.9 2,666.4 2,737.6 -5.1 3.9 3.4 0.9 0.5 0.8 1.9 2.3 2.1 1.2 7.8 7.1 6.0 5.5 5.3 3.59 1.33 2.30 7.22

3.62 1.33 2.21 7.17

3.33 1.33 2.17 6.82

3.28 1.34 2.20 6.81

3.32 1.31 2.21 6.83

85.25 90.36 86.80 87.34 90.8* 31.47 33.27 34.67 35.67 35.9* 54.70 55.22 56.62 58.62 60.4* 171.42 178.84 178.10 181.63 187.1* 4.18 4.33 -0.41 1.98 3.01

* Provisional figures to one decimal place only. Numbers may not add up due to rounding. Source: International Monetary Fund, World Economic Outlook Database, April 2014; Gesamtverband der Deutschen Versicherungswirtschaft (GDV)

hailstorms cost the industry circa EUR 3.1 billion. While losses fell within the catastrophe tolerance levels of most European insurers, for German participants that write their business locally with a concentration in property lines, accumulated losses may have caused several to exceed their catastrophe budgets significantly. The floods were the worst to hit Germany since 2002, making 2013 an uncommon year for claims and resulting in economic damage of EUR 17 billion for central Europe. This prompted calls for compulsory flood insurance, given that many retail and private properties in Germany are currently uninsured. German companies consider both the 2002 and 2013 floods to be 1:100 year events. However, in the past 12 years considerable resources have been invested in flood defences. In comparison with the 2002 floods, fewer major German economic centres and towns were inundated, with rural areas the most severely affected. While the market could easily cope with last year’s natural catastrophe losses since insurers are well capitalised, claims from hailstorms were particularly acute given the unusually large size of the hail and the storms’ movement through densely populated areas. For A.M. Best-rated companies, these events reduced earnings and profitability rather than depleted capital, as the first half of 2013 was otherwise a fairly benign period for large losses. According to industry data, non-life insurers will post a technical loss of EUR 1.4 billion for 2013 largely as a result of natural catastrophes, with a combined ratio of 102%. Despite the losses, motor and property rates have not increased much in 2014. Worth noting is that all insurers – not just those in Germany but Europe – expect to see more losses from natural catastrophes. They anticipate in their businesses and models that floods and hailstorms are not likely to diminish. If this proves correct, it would lead to a rise in losses and potentially higher rates in the medium to long term. Most recently, insured losses from windstorm Ela in June 2014 totalled upwards of EUR 650 million, making it the second most expensive storm for non-life insurers over the past 15 years and illustrating the increased frequency of such natural catastrophe events.

Non-Life Sector Resilient Despite Record Losses Provisional figures show that premium income for German non-life insurers grew by 3.0% to EUR 60.4 billion in 2013. This follows prior year increases of 3.5% in 2012 and 2.5% in 2011. All 2

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Germany Non-Life & Life

lines, with the exception of accident and marine, recorded higher premiums for the year. Over the past two to three years, premiums have benefitted from rising rates following a period of fierce competition, especially in the motor segment, which led to inadequate pricing. In general, business volumes and exposures have remained stable. 2013 was a record year for non-life losses as a result of the aforementioned natural catastrophes, with more than 2 million claims filed. Motor insurers reported that they had paid nearly 34% more to their customers for semi-comprehensive cover and approximately 17% more for comprehensive cover than in 2012. Claims paid by insurers on buildings increased by 45% in 2013, and property insurers recorded an overall 24% rise in claims. This came on the back of a relatively uneventful 2012 in terms of natural perils. A.M. Best expects more normalised performance for property lines of business in the first half of 2014, based on a fairly quiet period to date in terms of natural catastrophes. Despite flood and hailstorm-related losses, insurers were able to shoulder the costs for their customers. They held up well because of generally strong balance sheets and a significant cushion of equalisation reserves available for bad loss years. In addition, many large German insurers that A.M. Best tracks have diversified operations and income streams, and are not dependent on the German market alone. Overall, German insurers also have prudent reserving practices and conservative investment portfolios, with the majority of their investments in fixed-income instruments. Given the challenges of a protracted low rate environment for investment portfolios, non-life insurers in Germany have been increasing rates as a result of a particular focus on technical income and underwriting profitability. Of interest, low rates have actually supported capitalisation of German insurers in the short term through higher unrealised investment gains, which receive credit under A.M. Best’s risk-based capital model, Best’s Capital Adequacy Ratio (BCAR). Local participants continue to dominate the non-life insurance sector (see Exhibit 2). Allianz Versicherungs is the largest in the category, accounting for EUR 9.1 billion of gross premiums

Exhibit 2 Germany Non-Life – Top 20 Insurers Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Source:

Company Allianz Versicherungs-AG AXA Versicherung AG Allianz Global Corporate & Specialty SE HDI-Gerling Industrie Versicherung AG R+V Allgemeine Versicherung AG ERGO Versicherung AG LVM Landwirtschaftlicher Versicherungs Generali Versicherung AG VHV Allgemeine Versicherung AG HUK-COBURG-Allgemeine Versicherung AG HUK-COBURG Haftpflicht-Unterstuetzungs Gothaer Allgemeine Versicherung AG Württembergische Versicherung AG R+V Versicherung AG HDI Versicherung AG SV SparkassenVersicherung Gebaeudevers AachenMuenchener Versicherung AG Bayerischer Versicherungsverband Versicherung Westfaelische Provinzial Versicherung AG DEVK Allgemeine Versicherungs AG

Gross Premiums Written (EUR Thousands) 2011 2012 2013 8,906,456 9,067,491 9,092,554 3,544,571 3,714,576 3,704,368 2,725,443 3,019,176 3,358,509 2,720,547 3,056,939 3,270,098 3,023,753 3,164,707 3,230,712 2,711,532 2,716,855 2,857,365 1,553,328 1,765,523 1,867,106 1,596,909 1,712,279 1,759,231 1,372,433 1,437,951 1,551,529 1,248,488 1,367,236 1,546,764 1,363,568 1,435,854 1,532,399 1,426,021 1,465,596 1,526,900 1,379,816 1,476,750 1,523,388 1,492,356 1,525,614 1,521,600 588,352 1,397,226 1,446,364 1,232,613 1,244,317 1,310,384 1,074,030 1,178,506 1,256,061 1,058,561 1,089,161 1,131,165 1,039,749 1,072,674 1,103,163 995,232 1,034,706 1,087,638

– Best’s Statement File – Global

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2011 105.4 103.4 97.2 109.8 102.3 94.4 96.4 96.7 102.3 98.1 102.6 97.2 92.5 106.6 96.5 97.7 91.2 106.9 94.3 98.4

Gross Combined Ratio (%) 2012 2013 97.7 104.0 97.1 96.8 92.0 89.0 101.4 108.4 104.6 108.8 96.5 97.8 94.9 94.7 95.9 98.2 98.3 99.5 94.9 93.5 98.3 97.1 97.6 101.6 94.3 101.8 99.8 97.9 105.1 105.9 95.9 115.0 92.9 92.8 101.1 99.6 92.9 92.5 95.4 97.0

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Exhibit 3 Germany Non-Life – Combined Ratio by Line of Business Private Property Non-Private Property Marine Credit & Surety Third-Party Liability

Germany Non-Life & Life written (GPW) in 2013, (15.1% of the market). This is followed by Allianz Global Corporate & Specialty, which accounted for EUR 3.4 billion of GPW in 2013, (5.6% of the market), and Germany’s third-largest insurer, HDI-Gerling Industrie, which accounted for EUR 3.3 billion of GPW, (5.4% of the market). Foreign insurers have established significant positions, with AXA and Generali occupying second and eighth places, respectively.

Motor

While the motor sector remained a strong contributor to growth in 2013, the high level of natural catastrophes negatively affected motor Legal Expense performance, and the segment has continued Total* to produce underwriting losses. GPW rose 5.8% in 2013 to EUR 23.3 billion, following an 0 20 40 60 80 100 120 increase of 5.3% in 2012. Motor profitability has 2013* 2012 2011 2010 2009 2008 been under pressure, with strong competition * 2013: Estimated Source: Gesamtverband der Deutschen Versicherungswirtschaft (GDV) in the sector since 2008. The combined ratio was 104.4% in 2013, compared with 102.6% in Exhibit 4 2012 and 107.4% in 2011 (see Exhibit 3). Accident

Secondary Market Yields of German Government Bonds With Maturities Close to 10 Years

Yield (%)

Harmonised long-term interest rates for convergence assessment purposes. Life Insurers Under Pressure, but Making Headway 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0

The German life segment, which represents approximately half of the country’s GPW at EUR 90.8 billion, has continued to experience stress due to persistent low interest rates, which are putting pressure on traditional guaranteed life savings business. Despite this backdrop, GPW for the life segment grew 4% in 2013, from EUR 87.3 billion in 2012.

1/2008 3/2008 5/2008 7/2008 9/2008 11/2008 1/2009 3/2009 5/2009 7/2009 9/2009 11/2009 1/2010 3/2010 5/2010 7/2010 9/2010 11/2010 1/2011 3/2011 5/2011 7/2011 9/2011 11/2011 1/2012 3/2012 5/2012 7/2012 9/2012 11/2012 1/2013 3/2013 5/2013 7/2013 9/2013 11/2013 1/2014 3/2014 5/2014 7/2014 9/2014

In the current environment, lower returns on life insurers’ bond portfolios resulting from historically low interest rates have not only put earnings and capital positions under pressure, but contributed to make classical guaranteed life savings products less attractive. This casts doubt on their long-term sustainability, threatening prospects for the industry’s growth as a whole. As a result, companies are examining ways to improve profits. This includes developing Source: Europeanand Central Bank and European introducing newCommission products(ECB) in the life savings business with less risk for insurers and more attractive features for consumers. This may prove challenging, as traditional life savings products have been very strong in Germany historically and a mainstay of the life insurance market.

At their peak in the 1990s, German life insurers were able to offer high-interest guarantees of up to 4%, although this has fallen to a historic low of 1.75% over the past few years. In January 2014, the German government proposed that it would lower the guaranteed minimum that life insurers pay to policyholders annually to 1.25% as of Jan. 1, 2015, citing the protracted low rate environment. This would further detract from the appeal of traditional stable life products for savers and retirees. The measure is part of a broader reform of Germany’s life insurance industry aimed at improving the financial strength of its insurers. This, along with the impending introduction of Solvency II, has spurred the switch to new, capital light products. Several larger insurers have been successful in introducing such products. Some feature adjustable guarantees where policyholders can benefit from upward movements in underlying assets, similar to unit-linked products. These products generally require less capital, thus enabling insurers to de-risk their life portfolios before the introduction of Solvency II in 2016. 4

Germany Non-Life – Combined Ratio by Line of Business Private Property

Special Report

Germany Non-Life & Life

Non-Private Property Marine Though life companies have been able to fulfill their legal obligations to pay guarantees,

cuts in interest rates by the ECB and protracted low interest rates have added stress Credit &continued Surety to insurers and put pressure on their business models. In recent months, the market yield of the 10-year German bond has tumbled below 1.0% (see Exhibit 4), whereas in July 2008, German bonds Motor were yielding approximately 4.5%. In addition to battling low investment returns with new products, life insurers have also been under pressure from regulatory requirements to Accident finance the “Zinszusatzreserve,” literally an “additional interest rate reserve” required to ensure Legal Expense life insurers can meet guaranteed returns. Introduced in 2011, effectively it amounts to an extra burden Total* on insurers, but one that regulators consider essential. Companies have a variety of ways to finance the Zinszusatzreserve, including out of investment surplus, regular income, or through 0 20 40 60 complying 80 100 120Zinszusatzreserve in a low rate environment will unrealised gains. However, with the continue German life insurers’ balance sheets and earnings, particularly for 2013* to put 2012pressure 2011 on 2010 2009 2008 * 2013: Estimated smaller companies that are less diversified and more dependent on their life business. Third-Party Liability

Source: Gesamtverband der Deutschen Versicherungswirtschaft (GDV)

Exhibit 4 Secondary Market Yields of German Government Bonds With Maturities Close to 10 Years 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 1/2008 3/2008 5/2008 7/2008 9/2008 11/2008 1/2009 3/2009 5/2009 7/2009 9/2009 11/2009 1/2010 3/2010 5/2010 7/2010 9/2010 11/2010 1/2011 3/2011 5/2011 7/2011 9/2011 11/2011 1/2012 3/2012 5/2012 7/2012 9/2012 11/2012 1/2013 3/2013 5/2013 7/2013 9/2013 11/2013 1/2014 3/2014 5/2014 7/2014 9/2014

Yield (%)

Harmonised long-term interest rates for convergence assessment purposes.

Source: European Central Bank and European Commission (ECB)

The Zinszusatzreserve requires companies to hold a reserve for each tariff cohort that guarantees a return above the reference rate for expected asset returns. The reserve equals the interest rate shortfall that is expected to arise over the following 15 years. The reference rate is the rolling average of the ECB AAA 10-year rate. The lower this rolling average, the higher the reserve required. As a consequence of the steady downward movement of rates during the past decade, the reference rate may keep falling for some time. In 2011, the Zinszusatzreserve only had to be established for policies with a guaranteed return of 4%, which cost the industry as a whole approximately EUR 1.5 billion. By 2012, the uniform rate (on which the Zinszusatzreserve reserve calculations are based) declined sharply to 3.64%, requiring a further amount of more than EUR 5 billion to be added to the Zinszusatzreserve. While insurers have been able to use unrealised gains to finance their Zinszusatzreserve, the amount required could grow substantially over the next 10-15 years to tens of billions of euros. This could lead insurers to use a large proportion of their unrealised gains, eventually moving closer to affecting capital. Another problem is that while rising interest rates would take time to reduce the Zinszusatzreserve requirements, they immediately deplete an insurer’s level of reserves and unrealised investment gains linked to their generally substantial long-term bond portfolios, thus making it harder to finance the buffer going forward. In addition, the unrealised gains on insurers’ balance sheets will decrease over time as bonds mature and proceeds are reinvested at lower interest rates. A.M. Best will continue to monitor the situation closely for new developments.

German Insurers Well Placed, Though Challenges Remain Insurance companies that A.M. Best rates in Germany have been resilient to the low interest rate environment. They are overall well capitalised, with strong balance sheets and excess 5

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reserves to meet current challenges (see Exhibit 5). In addition, many benefit from a diversified book of both non-life and life business. Provided there are no major natural catastrophes for the remainder of the year, the sector should be positioned to post an improved combined ratio in 2014. A.M. Best expects improvements in lines such as motor and also property, as domestic demand continues to recover and as insurers attempt to recoup losses through rate increases. Due to the low interest rate environment there has been an increased focus on underwriting discipline for a number of years. However, the industry still faces significant challenges that include the implementation of Solvency II, which places increased solvency capital requirements on the industry and especially high regulatory capital charges on long-dated and lower credit quality assets. German insurers are well placed to increase investments in alternative asset classes to help earn better returns as they continue to manage low interest rates. These include renewable energy and infrastructure projects to repair roads and bridges, for which there is government support. Despite a paucity of such products due to the worldwide recession, German companies are in a good position to allocate some of their invested assets into these types of alternative classes. A.M. Best expects German insurers to move cautiously into these asset classes since, in addition to the higher expected returns, they also carry increased inherent volatility and illiquidity, and therefore high capital requirements. This is not a particular concern now because current levels of capital are sufficient to support this additional risk.

Exhibit 5 Germany Non-Life & Life – A.M. Best-Rated Companies Ratings as of Sept. 15, 2014. AMB # 085761 085302 087997 085449 085303 085304 085382 085437 084019 085064 086531 085310 084112 085074 085076 085070 085259 085842 077779 078321 085011 084710

Company AachenMuenchener Lebensversicherung AG AachenMuenchener Versicherung AG Allianz Global Corporate & Specialty AG Allianz SE Central Krankenversicherung Aktiengesellschaft COSMOS Lebensversicherungs-AG COSMOS Versicherung Aktiengesellschaft Delvag Luftfahrtversicherungs-AG Delvag Rueckversicherungs-AG E+S Rueckversicherung AG Euler Hermes Deutschland Aktiengesellschaft General Reinsurance AG Generali Deutschland Holding AG Generali Lebensversicherung AG Generali Versicherung AG Hannover Rueck SE HDI Haftpflichtverband der Deutschen Industrie V.a.G. HDI Lebensversicherung Aktiengesellschaft HDI-Gerling Industrie Versicherung Aktiengesellschaft HDI-Gerling Welt Service Aktiengesellschaft Munich Reinsurance Company SCHWARZMEER UND OSTSEE Versicherungs-Aktiengesellschaft SOVAG

* Best’s FSR Rating Action Affirmed; Best’s ICR Rating Action Upgraded Source: – Best’s Statement File – Global

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Best’s Ratings Financial Issuer Strength Credit A a A a A+ aaA+ aaA a A a A a A a A a A+ aaA+ aaA++ aa+ A a A a A a A+ aaA a+ A a+ A a+ A a+ A+ aaB++ bbb

Rating Outlook Negative Negative Stable Stable Negative Negative Negative Stable Stable Stable Stable Stable Negative Negative Negative Stable Stable Stable Stable Stable Stable Negative

Rating Action Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Affirmed Upgraded* Upgraded* Upgraded* Upgraded* Affirmed Affirmed

Rating Effective Date 9-Aug-13 9-Aug-13 18-Jul-14 18-Jul-14 9-Aug-13 9-Aug-13 9-Aug-13 27-Jun-14 27-Jun-14 23-Aug-13 18-Jul-14 17-Jun-14 9-Aug-13 9-Aug-13 9-Aug-13 23-Aug-13 16-May-14 16-May-14 16-May-14 16-May-14 20-Nov-13 28-Aug-14

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Germany Non-Life & Life

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Published by A.M. Best Company

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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. 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. 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 non-rating related services or products offered. A.M. Best’s Special Reports and any associated spreadsheet data are available, free of charge, to all Best’s Insurance News & Analysis subscribers. Nonsubscribers can purchase the full report and spreadsheet data. Special Reports are available through our Web site at www.ambest.com/research or by calling Customer Service at (908) 439-2200, ext. 5742. Briefings and 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) 439-2200, ext. 5644. SR-2014-390