Outlook Stable for Dallas National

May 30, 2008

A.M. Best Co. revised the outlook to stable from negative and affirmed the financial strength rating of “B++” (Good) and the issuer credit rating of “bbb” for Dallas National Insurance Company (DNIC).

The changes reflect DNIC’s stabilization of risk-adjusted capitalization driven by continued operating profitability and more moderate growth in premium volumes and liabilities in 2007. The stable outlook also reflects management’s more moderate growth projections while maintaining historical profitability, which should result in supportive risk-adjusted capitalization over the intermediate term.

The ratings reflect DNIC’s adequate risk-adjusted capitalization, historical underwriting and operating profitability and the financial support provided by its owner.

Offsetting the positive rating factors are DNIC’s rapid growth in premium volume and associated liabilities in recent years (although moderating in 2007) and the uncertainties associated with this growth and the company’s expansion into additional states and new lines of business and its elevated common stock leverage.

Source: A.M. Best, www.ambest.com/ratings.

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