A.M. Best Affirms Dorinco Re; Outlook Stable

June 7, 2004

A.M. Best Co. has affirmed the financial strength rating of “A-” (excellent) of Dorinco Reinsurance Co., based in Midland, Mich.. The rating outlook has been revised from negative to stable.

Best said the rating action recognizes Dorinco’s excellent risk adjusted capitalization, its strong strategic relationship with its parent, the Dow Chemical Co., and the business profile of its insurance accounts. Dorinco’s risk portfolio remains diversified through the short-tail nature of its unrelated assumed reinsurance business, complementing the longer-tail exposures associated with its Dow Chemical business (approximately 50 percent of total risks by premium volume).

Furthermore, Dorinco’s unique production sources and cost-efficient operating structure afford it a competitive expense advantage relative to its reinsurance peers.

In 2003, policyholders’ surplus improved significantly through the commutation of a large retroactive reinsurance agreement which had been executed in 1999. However, following five years of declining surplus associated with significant dividend payments, underwriting losses and unrealized capital losses, surplus remains below its historically superior level of five years ago. Nonetheless, this one-time realized capital gain was sufficient to restore capital commensurate with its current rating.

A.M. Best accordingly has revised its rating outlook from negative to stable.

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