Fitch to Review Ratings

August 3, 2001

Over the next few weeks, Fitch plans to study the ratings on the property/casualty insurance and reinsurance companies in its ratings universe which have material U.S. commercial lines exposures, to decide if negative ratings actions are warranted.

The move follows Fitch’s affirmation of its Negative Rating Outlook regarding the U.S. property/casualty insurance industry in general and heightened fears as to the adequacy of individual insurers’ loss reserves for commercial lines business. The concern relates to both declining loss cost trends impacting more recent accident years and asbestos and environmental exposures from prior accident years.

Fitch has remained holding a Negative Rating Outlook for the U.S. property/casualty industry since the third quarter of 2000, heavily reflecting concerns as to loss reserve adequacy. Fitch feels there is a good chance a number of insurers will need to make material additions to their commercial lines reserves prior to year-end 2001.

Fitch plans to revisit its present commercial lines insurer ratings following stress testing the resiliency of insurers’ balance sheets and earnings with the assumption that loss reserve levels on both old and recent accident years, and present premium rates, will likely prove to be less adequate than thought. The stress tests will feature both quantitative and qualitative elements.

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