2009 Credit Rating Report -Standard & Poors Research Update-June 11/10

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Research Update: County of Essex 'AA -' Ratings Affirmed On Good Financial Position And Low Stand -Alone Debt; Outlook Stable Overview • We are affirming our 'AA -' long -term issuer credit and senior unsecured debt ratings on the County of Essex. • In part, the ratings reflect our assessment of a strong financial risk profile, as well as a less diversified economy than that of similarly rated peers. • The stable outlook reflects our expectation that Essex's credit quality will remain at current levels in the near term, with low debt, strong liquidity, and stable budgetary performance. • The outlook also reflects our expectation that the county's economy will not deteriorate significantly. Rating Action On June 11, 2010, Standard & Poor's Ratings Services affirmed its 'AA -' long -term issuer credit and senior unsecured debt ratings on the County of Essex, in the Province of Ontario (AA- /Stable /A -1 +). The outlook is stable. Rationale The ratings on Essex reflect Standard & Poor's view of the following factors: • In our opinion, Essex's healthy financial position is largely a result of its strong liquidity. Its reserves and liquidity levels easily surpass its net debt obligations. Reserve and reserve fund balances increased moderately in 2008 to C$70.2 million, from a five -year average of C$52.2 million. Similarly, cash and investment balances have been more than C$40 million since 2003 (cash balances and liquid assets represented about 63.5% of operating expenses in 2008). As a result, the county has been a strong net creditor in each of the past 10 years. • Further bolstering its financial risk profile, Essex's stand -alone debt and debt - service burdens are low compared with those of similarly rated peers. By the end of fiscal 2008 (Dec. 31), direct debt represented 32.8% of operating revenues, while interest expense accounted for only 1.9% of operating revenues. Absent any projected debt issuance, we expect the county's own debt levels to decline to less than 25% of operating revenue by 2012, lower than the median of similarly rated Canadian peers. • Essex's budgetary performance is stable, in our view. In fiscal 2008, the county generated about a 13% surplus of operating revenue, a moderate Standard & Poor's I RatingsDirect on the Global Credit Portal I June 11, 2010 2 8038451300071004