A.M. Best Assigns FSR for Darwin Group, Subsidiaries

November 16, 2005

A.M. Best Co. has assigned financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” to the operating companies of Delaware-based Darwin Group Inc. (DGI), which consists of Darwin National Assurance Company (DNA) and its newly formed reinsured subsidiary, Darwin Select Insurance Company (Darwin Select), which together form Darwin Group.

DGI is an intermediate holding company, which is ultimately owned by Alleghany Corporation (Alleghany) (Wilmington). Prior to these actions, DNA was assigned an FSR of A (Excellent), operating as a reinsured affiliate of the Capitol Insurance Group (Madison, Wis.), also a subsidiary of Alleghany. Concurrently, A.M. Best has assigned ICRs of “bbb” and “a” to Allegheny and its remaining insurance company subsidiaries, respectively. All ratings have a stable outlook.

The Darwin Group’s rating actions reflect Alleghany’s commitment to the specialty admitted markets through DNA, the competitive advantages afforded by Darwin Professional Underwriters Inc. (an affiliated underwriting agency) and the additional flexibility provided by Darwin Select, a non-admitted, excess and surplus lines insurer. These rating actions also consider the $135 million capital contribution from Alleghany in the fourth quarter of 2005.

Darwin Professional Underwriters, Inc. specializes in directors and officers’ liability, errors and omissions liability and medical malpractice liability. The business is primarily written through approximately 150 producers, mainly wholesale brokers, and the remainder through major brokers and specialty retail agents. Targeted classes of business include commercial public/private, healthcare, law firms, insurance agents, hospitals and physicians.

On May 2, 2005, DNA received approval from the state of Arkansas regarding its application to acquire Ulico Indemnity Company, a clean shell formerly owned by Ulico Casualty Company. Immediately after the sale, Ulico Indemnity Company was renamed Darwin Select Insurance Company.

As part of Darwin Group’s niche specialty strategy, Darwin Select will focus on non-admitted, excess and surplus lines specialty liability insurance, including directors and officer’s liability, errors and omission liability and medical professional liability.

The ratings reflect Darwin Group’s strong capitalization, experienced management team, near-term earnings prospects and the benefits to be derived from its specialty product offerings.

Furthermore, the ratings also consider management’s intention to prudently manage and allocate capital in accordance with levels previously discussed with A.M. Best. Darwin Group also benefits from being part of Alleghany, which has substantial liquid assets, no debt and access to the capital markets.

Darwin Group is led by Stephen Sills, CEO, who brings insurance experience as the founder and former CEO of Executive Risk, and who has demonstrated a track record of producing strong results. Soft market conditions may provide some pressures to management; however, A.M. Best expects the company will not abandon its strong underwriting fundamentals.

These positive rating factors are offset by the significant challenges and uncertainties associated with recently formed companies, including the successful execution of its business plans.

A.M. Best will closely monitor Darwin Group’s results to ensure that capitalization remains supportive of the ratings and will maintain close scrutiny over operating results to see that rating expectations are achieved.

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