Unitrin Revised

A.M. Best Co. affirmed the financial strength rating of "A" (excellent) of Unitrin Property and Casualty Insurance Group, based in Dallas, Texas, and revised the rating outlook to negative from stable.

The rating reflects Unitrin's adequate capitalization for the current rating and balanced book of business among personal and commercial lines. These positive rating factors are derived from a diversified product offering, strong regional market presence, long-standing independent agency relationships and prudent catastrophe exposure management. The rating acknowledges Unitrin's actions to improve profitability, which have included implementing rate increases, geographically diversifying business and re-underwriting select books of business. As a result of these actions and firm market conditions, operating results have initially improved in 2003.

Ohio Casualty Group Affirmed

A.M. Best Co. affirmed the financial strength rating of "A-" (excellent) of the subsidiaries of Ohio Casualty Group based in Cincinnati, Ohio. The affirmation is based on the group's supportive capitalization, diversified product offerings and geographic spread of risk, as well as its strong brand name recognition and long-standing relationships with its independent agency distribution force.

A new management team has been proactive in implementing various initiatives, including an aggressive expense containment policy, re-underwriting of all product lines and strengthening underwriting guidelines, which has contributed to the group's restored operating profitability. Furthermore, the parent Ohio Casualty Corporation, closed a convertible note private offering in March 2002. The proceeds from the sale, which amounted to $201 million, were used to retire the Ohio Casualty Corporation's existing bank debt, which contained several onerous covenants that jeopardized the group's historically sound balance sheet strength.

Offsetting these positive rating factors is a below average return measures and decline in statutory surplus driven by poor underwriting experience. The group's poor underwriting experience coupled with dividend payments to Ohio Casualty Corporation has led to a marked deterioration in statutory surplus and rise in underwriting leverage measures over the last five years.

The rating outlook is stable based on the group's supportive capitalization and measures implemented by management to restore and stabilize overall earnings over the mid-term.

Iowa Mutual, Iowa American Upgraded

A.M. Best Co. upgraded the financial strength ratings to "A" (excellent) from "B" (fair) of Iowa Mutual Insurance Company and Iowa American Insurance Company both of De Witt, Iowa. The ratings have been removed from under review. The rating outlook is stable. These rating actions follow the close of the strategic alliance with Motorists Insurance Group based in Columbus, Ohio. Under the agreement, Iowa Mutual and Iowa American have both become participants in Motorists Insurance Group's inter-company pool with Motorists having majority control of Iowa Mutual's and Iowa American's boards of directors.

White Mountains Ins. Group Affirmed

Standard & Poor's Ratings Services affirmed its "BBB-" counterparty credit and senior debt ratings on White Mountains Insurance Group Ltd. and its "A-" counterparty credit and financial strength ratings on Folksamerica Reinsurance Co. (Folksamerica) following WTM's announcement that it plans to acquire Sirius International Insurance Corp. (Sirius International). S&P also affirmed the "A-" counterparty credit and financial strength ratings on Sirius International. The outlook on all these entities is stable.

Sirius is a global reinsurance company based in Sweden, and is currently a wholly owned subsidiary of the Swiss/Swedish industrial engineering group ABB Ltd. Sirius consists of three operating entities: Sirius International, a global reinsurer writing predominantly short-tail lines of business; Sirius America Insurance Co. (Sirius America), a U.S.-based writer of program business; and Scandinavian Re, a Bermuda-based finite reinsurer, which was placed into run-off in January 2002.

WTM uses acquisitions in addition to organic growth to increase its intrinsic value and build its scale and market presence, and the current ratings and outlook already incorporate this risk. WTM is expected to continue increasing its scale both organically and through acquisitions. The acquisition of Sirius is WTM's first major foray outside the North American market.

The stable outlook reflects the potential long-term benefits of the Sirius acquisition. Separately, WTM has realized substantial improvements in its operating performance, and is expected to maintain its very strong financial flexibility and liquidity in 2004.