Highlands Lowered

The “B++” FSR of Highlands Insurance Group Inc. was downgraded to “B” by A.M. Best, which also removed that rating from under review. Eleven members of the Highlands Insurance Group and an affiliated Lloyd’s organization are affected by the rating action. Cited as a major rating factor was a substantial loss reserve increase reported in the fourth quarter of 2000 (related primarily to the group’s commercial mutli-peril and workers’ comp lines of business) as well as the group’s marginal level of capitalization and continued poor operating results. Negative factors were partially offset by a strong local market presence.