Safeco P/C Group Affirmed

Fitch Ratings affirmed the "AA-" insurer financial strength rating on the Safeco property and casualty group. In addition, Fitch affirmed "A-" long-term and senior debt ratings on Safeco Corp. and the "BBB+" rating on Safeco Capital Trust I's (Safeco Capital) capital securities. The rating outlook is stable.

Fitch's rating action reflects Safeco P/C's strong competitive position in key business lines, favorable earnings trends, and solid capitalization. Fitch's ratings on Safeco and Safeco Capital reflect these factors, as well as Safeco's good operating earnings-based and cash basis interest coverage.

Partially offsetting these positives is intense competition and cyclical forces in Safeco P/C's key auto and homeowners' insurance lines that Fitch believes will challenge the company's ability to sustain current profitability levels.

Omaha P&C Under Review

A.M. Best Co. placed the financial strength rating "A-" (excellent) of Omaha Property and Casualty Insurance Co. (OPAC) under review with developing implications. The under review status reflects the announcement of a definitive agreement between Beazley Group and Mutual of Omaha Insurance Co. regarding the sale of Mutual of Omaha's wholly-owned subsidiary, OPAC.

Best noted that the acquisition is part of Beazley's entrance into the U.S. admitted market. The developing implications reflect anticipated capital improvement and increased shareholder participation of Beazley, which is offset by the uncertainty regarding its business plans and strategy in the U.S. market.

Under the terms of the acquisition, The Omaha Indemnity Company (OIC), an affiliate of Mutual of Omaha, has agreed to assume all obligations of OPAC prior to its acquisition by Beazley including reinsuring OPAC's historical business on a 100 percent quota share basis. As security for this quota share arrangement, OIC has agreed to place a certain amount of funds in trust equal to 100 percent of OPAC's gross reserves for historical business, and in the unlikely event that these funds in trust were exhausted, OIC would be required to provide additional funds to meet any further losses.

Best expects OPAC's former parent, Mutual of Omaha, to maintain an orderly exit from all property/casualty business. It also said OPAC's rating would remain under review pending the closing of the sale, which is anticipated in the first quarter of 2005.

Transatlantic Holdings Subs Downgraded

A.M. Best Co. downgraded the financial strength rating of Transatlantic Reinsurance Company and Putnam Reinsurance Company to "A+" (superior) from "A++" (superior). Concurrently, Best assigned the group members an issuer credit rating of "aa" and Transatlantic an issuer credit rating of "a." The outlook was revised to stable from negative.

The downgrade reflects the deterioration in the group's risk-adjusted capital, which is below that necessary to support the "A++" (superior) rating. The negative outlook had indicated that risk-adjusted capital had deteriorated in the prior two years due to the group's premium growth, driven by rate increases and significant reserve strengthening actions taken.

The group's risk-adjusted capitalization is at the low end for similar rated companies; however, the rating and stable outlook continue to reflect Transatlantic's long-standing strategic relationship with its majority owner, American International Group Inc., which beneficially owns 60 percent of Transatlantic.