A.M. Best Affirms Ratings of American Service Pool

A.M. Best Co. has affirmed the financial strength rating of B (Fair) and issuer credit ratings (ICR) of "bb" of American Country Insurance Company (American Country) and American Service Insurance Company, Inc. (American Service) (both domiciled in Elk Grove, IL). Both companies are members of the American Service Pool (ASI Pool). Concurrently, A.M. Best has affirmed the ICR of "b-" of Atlas Financial Holdings, Inc. (Atlas) (Cayman Islands) [TSXV: AFH], the ASI Pool members' parent, and the debt rating of "ccc" of Atlas' $18 million, 4.5% preferred shares. The outlook for all ratings is stable.

The rating affirmations reflect ASI Pool's historically weak operating performance, unfavorable reserve development and diminished business profile, all of which occurred under prior ownership. In addition, the ratings recognize a level of execution risk associated with management refocusing on its core lines of business while attempting to meet business plans and grow its premiums during a time of competitive market conditions, as well as the uncertainty surrounding the runoff of unprofitable business written while the pool was under the control of prior ownership.

These negative rating factors are partially offset by Atlas' knowledgeable management team that has extensive experience in its targeted commercial auto lines of business, its improving risk-adjusted capitalization, which is supportive of the current ratings, renewed focus on core lines of business and the potential for improved earnings as management focuses on historically profitable lines of business and runs off non-core lines and books produced by general and managing general agents.

Although the outlook is stable, factors that may lead to negative rating actions include deterioration in underwriting and operating performance, increased magnitude of adverse loss reserve development and the erosion of surplus that could consequently cause a decline in the pool's risk-adjusted capital position. Factors that may lead to positive rating actions include stabilization of the pool's loss reserve position, improved operating profitability and enhanced risk-adjusted capitalization.

The principal methodology used in determining these ratings is Best's Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "A.M. Best's Ratings & the Treatment of Debt"; "Equity Credit for Hybrid Securities"; "Rating Members of Insurance Groups"; "Risk Management and the Rating Process for Insurance Companies"; and "Understanding BCAR for Property/Casualty Insurers". Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, 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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A.M. Best Co.
Michael Russo
Financial Analyst, 908-439-2200, ext. 5372
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Rachelle Morrow
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Michael Lagomarsino, CFA
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Jim Peavy
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