AM Best Information Services

FEBRUARY 25, 2008 12:00 AM (EST)

A.M. Best Affirms Ratings of American Family Insurance Group and American Family Life Insurance Company

Kevin Dorsey-P/C
(908) 439-2200, ext. 5401

Steven Faulks-L/H
(908) 439-2200, ext. 5035

Public Relations
Jim Peavy
(908) 439-2200, ext. 5644

Rachelle Morrow
(908) 439-2200, ext. 5378


OLDWICK, N.J. - FEBRUARY 25, 2008 12:00 AM (EST)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of "a" of American Family Insurance Group (AMFAM) and its members. AMFAM's lead company is American Family Mutual Insurance Company, which includes three reinsured subsidiaries. Additionally, A.M. Best has affirmed the FSR of A (Excellent) and ICR of "a" of American Family Life Insurance Company (AFLIC). Concurrently, A.M. Best has withdrawn the rating of AMB-1 on the commercial paper program of American Family Financial Services, Inc. (AFFSI) as management has discontinued the program. All companies are domiciled in Madison, WI. The outlook for all ratings is stable. (See below for a detailed list of the companies and ratings.)

The ratings of AMFAM are based on its strong risk-adjusted capitalization, leading personal lines market position within most of its operating territories and its exclusive agency distribution system. The ratings also acknowledge the group's steady net investment income generated by its extensive invested asset base.

Offsetting these positive factors are AMFAM's volatile underwriting performance and geographic concentration of risk. The underwriting losses reported over the past five years were largely due to AMFAM's predominant geographic concentration in the Midwest. In the two most recent years, severe losses from wind/hail and winter storm activity produced underwriting losses and correspondingly negative pre-tax operating ratios. In an effort to reduce exposure to Midwest weather activity and a New Madrid earthquake, the group continued to expand its writings geographically and implemented new rating zones and policy language.

The rating actions taken on AFLIC recognize its integral role as the life insurance member of AMFAM. AFLIC provides a wide array of life insurance and financial products through AMFAM's multi-line career agency distribution channel. The ratings also reflect AFLIC's overall profitable operating performance and strong risk-adjusted capitalization on a stand-alone basis.

Offsetting these rating strengths are the challenges to improve the operating performance of AFLIC's variable annuity lines, sustain life insurance sales and increase the penetration of AMFAM's customer base.

The FSR of A (Excellent) and ICRs of "a" have been affirmed for American Family Insurance Group and its following members:

- American Family Mutual Insurance Company

- American Family Insurance Company

- American Standard Insurance Company of Ohio

- American Standard Insurance Company of Wisconsin

The FSR of A (Excellent) and the ICR of "a" have been affirmed for American Family Life Insurance Company.

The following rating has been withdrawn:

American Family Financial Services, Inc.-

-AMB-1 commercial paper

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.

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