[March 20, 2013]

A.M. Best Upgrades Ratings of American Resources Insurance Company Incorporated

A.M. Best Co. has upgraded the financial strength rating to B (Fair) from B- (Fair) and issuer credit rating to "bb+" from "bb-" of American Resources Insurance Company Incorporated (ARIC) (Mobile, AL). The outlook for both ratings is stable.

The rating upgrades reflect ARIC's improved risk-adjusted capitalization as management shrinks its run-off liabilities, generally favorable development of legacy loss reserves in recent years and the continued wind-down of warranty contracts, with about 90% of them expiring as of year-end 2012.

Partially offsetting these positive rating factors are ARIC's continued (albeit diminished) uncertainty associated with run-off legacy black lung workers' compensation and auto warranty liabilities, the challenges inherent with re-entering the market in August 2012, including overall execution risk associated with the implementation of its business plan, and the expectation of continued underwriting losses through 2015 as set forth by management due to major upfront investments in technology and staff in support of business production. The underwriting losses will likely result in a declinein risk-adjusted capitalization in the near term. Despite these concerns, the outlook recognizes the continued orderly run-off of ARIC's legacy liabilities, the implementation of its improved corporate governance controls and the resolution of outstanding issues related to ownership interests of the former management group.

A.M. Best believes ARIC is adequately positioned at its current rating level. Continued favorable run-off of the company's liabilities, improvement in risk-adjusted capitalization as measured by Best's Capital Adequacy Ratio or profitable operations supported by an appropriate level of risk-adjusted capital could lead to favorable movement in ARIC's ratings. However, the ratings and/or outlook may come under negative pressure if there is adverse development with the company's run-off liabilities, a significant deviation in actual operating results from projected results over the near term or a significant erosion of its capital base beyond A.M. Best's expectations.

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. Key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Understanding BCAR for Property/Casualty Insurers"; and "Rating Members of Insurance Groups." Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

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

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