NAICO Downgraded

July 4, 2006

A.M. Best Co. downgraded the financial strength rating to “B+” (very good) from “B++” (very good) of National American Insurance Co. of Chandler, Okla., and revised its outlook to negative from stable. Concurrently, Best assigned an issuer credit rating of “bb-” to NAICO’s parent, Chandler U.S.A. Inc., and a debt rating of “bb-” to Chandler’s 8.75 percent senior unsecured debentures due 2014. The ICR and senior debt ratings have been assigned a negative outlook.

These rating actions reflect the weakening in NAICO’s risk-adjusted capitalization due to a net loss and decline in surplus in 2004 driven by adverse loss reserve development on prior accident years. More specifically, the company reported approximately $25 million in prior accident year adverse reserve development in 2004. Most of this development stems from accident years 1997 through 2001, a period of growth and expansion into Texas. The aforementioned reserve development follows approximately $40 million in cumulative prior accident year adverse reserve development reported from 2000 through 2003.

Somewhat offsetting these negative factors are corrective actions in recent years, including significant rate increases, reducing exposures, improving risk selection and tightening policy terms and conditions. As a result of these actions, recent accident years appear to be developing more favorably. However, given the uncertainty surrounding the development of accident years 1997 through 2001, as well as the time it will take to determine the true profitability of more recent accident years, the negative outlook is appropriate. Although financial leverage of 39 percent at year-end 2004 at Chandler remains within Best’s expectations given its rating, its fixed coverage ratio has been volatile and falls below that expected for its rating.

Independence American Upgraded

A.M. Best Company upgraded Independence American Insurance Co. rating to “B++” (very good) from “B+” (very good). The company has a stable outlook.

The ratings are based on Independence American’s strong risk-adjusted capitalization on a stand-alone basis, profitable growing presence in the medical stop-loss business and positive aggregate statutory operating results. This rating should facilitate Independence American’s goal of writing insurance on its own paper to complement its growing reinsurance premiums. In anticipation of increasing its own business, Independence American, which now has 34 licenses, is filing employer medical stop-loss and short-term medical in most of the states in which it is licensed, and is actively considering filing other products, including dental and vision.

AMIC is a holding company principally engaged in the health insurance and reinsurance business through Independence American Insurance Co. and its managing general underwriter division.

Rembrandt Affirmed

A.M. Best Co. affirmed the financial strength rating of “A” (excellent) and assigned an issuer credit rating of “a” to Rembrandt Insurance Co. Ltd., reflecting Rembrandt’s strong risk-adjusted capitalization and solid financial performance, as well as its business concentration on the Vitol group’s risks. The outlook for both ratings is stable.

Best believes Rembrandt will likely maintain strong risk-adjusted capitalization supported by low net exposure after taking account of its comprehensive reinsurance program placed with secure-rated companies. Retained earnings are likely to increase at a lower rate of approximately 6 percent over the next two years (compared to 36 percent in 2004) as dividends are paid from 2005 onwards.

Best expects robust financial performance over the next two years as Rembrandt’s past excellent underwriting performance is likely to be maintained and will continue to be the main driver for pre-tax profits. The combined ratio of 43.6 percent in 2004 is forecast to further improve to approximately 37 percent by 2006 due the increase in net claims reserves expected.

Rembrandt is likely to remain focused on underwriting the Vitol Group’s risks, mainly insuring marine cargo and charterers’ liability risks. Best believes diversification into other lines of business or into third-party risks is unlikely to be significant in terms of premium volume over the next two years.

Alea Group’s Subsidiaries Under Review

A.M. Best Co. placed the financial strength rating of “A-” (excellent) and the issuer credit rating of “a-” of the insurance and reinsurance operating subsidiaries of Alea Group Holdings Bermuda Ltd. under review with negative implications.

This rating action is based on Best’s opinion that Alea’s prospective risk-adjusted capitalization is under pressure and that the potential exists for further volatility in prior year loss reserves. It is expected that Alea will address the prospective capital strain during the third quarter of 2005.

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