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A.M. Best Revises Outlook to Stable for Ratings of Dealers Assurance Company

The rating actions reflect Dealers' favorable operating results and improved risk-adjusted capital position that has benefited from retained earnings and a 2006 capital infusion from its ultimate parent, Southwest Re Holdings, Inc. Additionally, the affirmations recognize the company's well-established niche in the vehicle service contract industry.

Although offsetting factors include high unearned premium leverage, Dealers has made considerable progress in establishing actuarial reporting procedures with respect to the long duration unearned premium reserves held at the administrator obligors with whom it does business. The potential losses associated with the administrator obligors' reserves, which do not flow through its financial statements, comprise the vast majority of the company's true risk exposure. As a result, A.M. Best's review relies upon and considers information provided by Dealers regarding administrator obligors' unearned premium reserves.

Prospectively, A.M. Best will continue to monitor capitalization and performance to ensure that they remain supportive of the current ratings.

For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

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. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts
Duncan McColl, 908-439-2200, ext. 5826
duncan.mccoll@ambest.com
or
Joseph Roethel, 908-439-2200, ext. 5630
joseph.roethel@ambest.com
or
Public Relations
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com