A.M. Best Further Downgrades Ratings of Commercial Travelers and Monitor Life

March 27, 2003

A.M. Best Co. announced that it has downgraded the financial strength ratings to B- (Fair) from B+ (Very Good) of Commercial Travelers Mutual Insurance Company and its wholly-owned subsidiary, Monitor Life Insurance Company, both headquartered in Utica, New York, and said that the outlooks remain negative.

“These rating actions are in response to the reduced level of the Commercial Travelers group’s year-end statutory surplus position, which was substantially below A.M. Best’s expectations and will contribute to a considerable decline in its already modest risk-adjusted surplus position,” said the rating agency.

“Over the past two years, the Commercial Travelers group has experienced increased operating losses and significant declines in surplus. Monitor Life has also experienced growth related losses for five consecutive years,” it continued.

“Commercial Travelers has implemented a number of actions to improve profitability and is presently considering alternatives to raise additional surplus. However, A.M. Best believes that despite these corrective measures, the Commercial Travelers group will be challenged to achieve favorable operating earnings and organic surplus expansion near term,” the announcement concluded.

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