Kemper on CW Neg

Standard & Poor's Ratings Services placed its "BB+" counterparty credit and financial strength ratings on the members of the Kemper Insurance Cos. Intercompany Pool on CreditWatch with negative implications because Kemper will reportedly be significantly challenged to meet S&P's expectations in terms of earnings,
capital adequacy, and future interest payments on the surplus notes.

S&P's also said that it placed on CreditWatch negative its surplus notes rating on Lumbermens Mutual Casualty Co. and lowered it to "CCC" from "B+."

Lloyd's Affirmed

S&P's affirmed its "A" long-term insurer financial strength rating on U.K.-based Lloyd's insurance market. The "continuing commitment of capital providers to the Market and the consequent increase in capacity and funds at Lloyd's for 2003," were factors in the ratings action, according to S&P's. Also affecting the affirmation was the expectation that Lloyd's will have a "very strong operating performance for the 2002 and 2003 years of account."

These factors are partly offset by Lloyd's reduced but recovering capital adequacy as a result of open-year losses; the further progress required with the implementation of structural reforms to maintain the Market's competitive position; poor returns experienced by many capital providers prior to 2002; the vulnerability of the market to reinsurer failure; and the market's continuing contingent exposure to Equitas Ltd.

Continuation of the rating at its current level depends upon a number of expectations being met. Capacity is expected to remain stable or increase slightly during 2003. It is expected that there will be further selective reductions in capacity by some members, but no significant withdrawals over the next few years. Operating performance in 2003 is ex-pected to be at least similar if not better than 2002. Further rate increases are expected during 2003, and rates in most lines of
business are expected to be maintained during the 2003-2004 renewals.

Infinity P/C Assigned 'A'

A.M. Best Co. has assigned a financial strength rating of "A" (excellent) to Infinity Property and Casualty Group, the core auto subsidiaries of Infinity Property and Casualty Corp (IPCC). IPCC was created through a spin-off of American Financial Group Inc.'s non-standard automobile business produced through independent agents. The rating outlook is stable.

The rating reflects Infinity PC's excellent capitalization, strong non-standard automobile market presence and the historically favorable overall operating performance of the book. The group's solid capital position is driven by its moderate investment risk profile and commitment to loss reserve adequacy. Historical underwriting profitability is attributable to management's product expertise, local market knowledge and utilization of sophisticated technologies within
the pricing, risk selection and claims handling processes. Underwriting returns have been aided by the low cost operating structure, which is facilitated by technology and consolidations of select back office functions.

A.M. Best said the rating also recognizes Infinity P/C's strong non-standard private passenger automobile market presence as one of the top nonstandard auto insurance groups in the U.S. with direct premiums written of approximately $905 million.

Somewhat offsetting these positive rating factors are the potential future earnings fluctuations due to localized competitive market conditions and fraud activity prevalent in some key nonstandard automobile markets. The group's premium is focused in three key states, California, Florida and New York, which represent
approximately 50 percent of the total book of business.

A.M. Best expects the group's parent, IPCC, to maintain manageable financial leverage and solid fixed coverage ratios as a result of expected favorable earnings and operating cash flow.

Chubb on CreditWatch Neg

S&P's Ratings Services placed on CreditWatch with negative implications its "A+/A-1" counterparty credit and senior debt ratings on New Jersey-based The Chubb Corp. following Chubb's announcement concerning several unexpected incremental fourth-quarter 2002 charges for the strengthening of reserves for asbestos exposure and directors and officers liability coverage in its European
operations.

S&P's also said that it placed its "AA+" counterparty credit and financial strength ratings on Chubb's operating insurance companies on CreditWatch negative.

The very strong "AA+" ratings on Chubb's operating companies are based on the group's leadership position in a range of insurance lines in both commercial and personal segments of the property/casualty industry. In addition, the group enjoys very strong brand-name recognition and secure capital strength.

S&P's said it plans a full review of the charges as well as the "underlying performance of its business lines, and reinsurance related to asbestos."

Employers Re Corp. Affirmed

S&P's affirmed its "AA-" counterparty credit and financial strength ratings on Employers Reinsurance Corp. (www.ge.com) and its wholly owned subsidiaries. Also affirmed were the "A" counterparty credit and senior debt ratings on GE Global Insurance Holding Corp., the parent company of GE Capital Services' reinsurance businesses.

All ratings were removed from Credit-Watch where they had initially been placed on Sept. 30, 2002, and subsequently updated on Dec. 6, 2002. The outlook is negative.

The negative outlook reflects uncertainty about whether the management team, given its strong ties to GE, will remain in place and execute its long-term corporate strategy. The management team has taken steps to improve pricing adequacy and operating performance, but S&P's believes that it is too early to judge its effectiveness fully.