AM Best has assigned a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a” (Excellent) to S-Squared Insurance Company, Inc. (S2) (Honolulu, HI). The outlook assigned to these Credit Ratings (ratings) is stable.

The ratings reflect S2’s balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, limited business profile and appropriate enterprise risk management (ERM).

The stable outlooks consider AM Best's expectation that S2’s balance sheet strength assessment fundamentals will continue to strengthen over the medium term, with internal profit generation and retention levels that support continued growth in the company’s surplus, while maintaining profitable operating performance.

S2’s balance sheet strength assessment is underpinned by its risk-adjusted capitalization, which is at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR). This captive insurer is a strategic and integrated extension of Micron Technology, Inc.’s [Nasdaq: MU] (Micron) corporate ERM strategy, and Micron provides S2 capital and financial flexibility. S2’s risk-adjusted capitalization is expected to remain at the strongest level, supported by increased retention of earnings. S2 has a conservative investment portfolio with conservative loss reserving strategies.

S2’s operating performance reflects actuarially needed premium for its coverage offerings of U.S. workers’ compensation and participation in the property tower covering production facilities in Japan and Taiwan. Though S2 is a new formation, Micron has experience with both of these lines since its founding in the 1970s. Micron has had minimal workers’ compensation losses historically and brought this business into the captive for efficiency. Micron believes that S2’s participation in the property tower can provide a portion of the coverage as efficiently as the traditional property market.

S2's limited business profile reflects its position as a single-parent captive of Micron with product and geographic concentration. Property exposures are concentrated in the Asia-Pacific region with workers’ compensation coverage provided for Micron’s U.S. facilities.

AM Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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