Swiss Re Downgraded

A.M. Best Co. downgraded the financial strength ratings to "A+" (superior) from "A++" (superior) of Swiss Re and its core subsidiaries. At the same time, Best downgraded the ratings on all debt instruments issued by Swiss Re's group entities, and affirmed Swiss Re's commercial paper program at "AMB-1+." The outlook on all ratings was changed to stable from negative.

The rating actions reflect Best's view that Swiss Re's prospective consolidated earnings are unlikely to be supportive of an "A++" consolidated risk-based capital level throughout the cycle. Current capital could be viewed as being at an "A++" level; however, the degree of "soft" capital mitigates this in part. This fact, combined with the earnings outlook for Swiss Re and the industry, leads Best to conclude that capital levels that are more consistent with an "A+" financial strength rating will be maintained prospectively. These ratings also factor Swiss Re's superior business position in the worldwide reinsurance markets, as well as its very stable and experienced management team.

Outlook Stable for LUBA Workers' Comp

A.M. Best assigned an initial financial strength rating of "A-" (excellent) to Louisiana United Businesses Self Insurers Fund, also known as LUBA Workers' Comp, based in Baton Rouge, La.. The outlook is stable.

Best said the rating reflects LUBA Workers' Comp's strong risk-adjusted capitalization, its profitable underwriting and excellent operating performance, as well as

its strong business profile in the Louisiana workers' comp market. The positive factors are somewhat mitigated by the Fund's business concentration in a single line and state, which magnifies its exposure to competition and potentially adverse economic and regulatory changes. With disciplined underwriting and a focus on risk management, LUBA Workers' Comp has produced excellent underwriting and operating results, building a solid surplus position through retained earnings and generating strong operating cash flows and good liquidity.

The Fund's surplus consists of earnings from prior years that have not been returned to the members. The Fund accumulates these earnings in a reserve that effectively represents the equity of the members. LUBA Workers' Comp maintains moderate leverage measures and its balance sheet strength is supported by a low-risk investment portfolio, conservative reserving practices and a prudent reinsurance program. The Fund has a high retention rate and is Louisiana's second-largest writer of workers' comp business in premium volume, offering coverage to a large and diverse population of Louisiana businesses.

Austin Mutual Affirmed

The financial strength rating of "A-" (excellent) of Minneapolis-based Austin Mutual Insurance Co. was affirmed by A.M. Best. The outlook is stable. It reflects the company's excellent capitalization, conservative balance sheet and local market knowledge. These factors are derived from management's conservative operating strategy, effective use of automation for internal processing and long-standing agency relationships. Effective Oct. 1, 2003, Northern Mutual Insurance Co.'s assets and liabilities were transferred to Austin Mutual, and Northern Mutual was dissolved, leaving Austin Mutual with the stand-alone fiancial strength rating of "A-".