A.M. Best Affirms Ratings of Ocaso, S.A. Seguros y Reaseguros

A.M. Best Co. has affirmed the financial strength rating of A+
(Superior) and the issuer credit rating of "aa-" of Ocaso, S.A.
Seguros y Reaseguros (Ocaso) (Spain). The outlook for both ratings is
stable.

The ratings reflect the company's superior risk-based
capitalisation, excellent operating performance and excellent business
profile. Partially offsetting these factors is the challenging market
environment in Spain.

Ocaso's risk-based capitalisation remains superior, having
benefited from significant profit retention in recent years. However,
Ocaso continues to strengthen reserves in respect of existing funeral
expense claims in order to meet regulatory requirements by 2013.
Notwithstanding this, A.M. Best believes that Ocaso's capital position
is strong enough to absorb the claims, and limited growth is supported
by higher retained earnings.

A.M. Best expects Ocaso's strong positive technical results to
continue, driven by the limited underwriting risks of its funeral
portfolio, cautious underwriting philosophy and expense control in
other lines of business. Total net profits for 2006 increased for four
consecutive years reaching approximately EUR 75 million (USD 101
million) compared to EUR 36 million (USD 48 million) in 2003. As a
result, A.M. Best expects the combined ratio to remain stable below
90% in 2007. Overall profits are likely to remain strong but
moderately decline due to lower investment income.

Ocaso is one of the leading providers of funeral expenses in Spain
with total of gross premiums written around EUR 700 million (USD 942
million), 45% of which comes from funeral expenses. The company
benefits from a strong brand and an extensive distribution network.
Despite a 5% increase in Ocaso's funeral expenses business, A.M. Best
believes that this segment is becoming increasingly saturated, thus
offering limited growth opportunities. Ocaso continues to diversify
into the residential/commercial buildings line of business, which
should help the company retain a significant position in the Spanish
insurance market. However, A.M. Best believes Ocaso may find it
difficult to significantly expand its non-funeral portfolio given the
strong competition in the Spanish non-life market. As a result, A.M.
Best expects only a moderate premium growth of 5.5% in 2007. In the
life sector, A.M. Best expects a slight decrease of premiums in 2007
due to the low interest rate environment in a market strongly
dominated by bancassurance agreements and also due to a change in the
income tax regulation.

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

Founded in 1899, A.M. Best Company is a full-service credit rating
organization dedicated to serving the financial services industries,
including the banking and insurance sectors. For more information,
visit www.ambest.com.