Fitch Moves 5 Insurers to Rating Watch Negative Following Katrina

September 13, 2005

Fitch Ratings has placed the ratings of five North American property/casualty insurance and reinsurance organizations on Rating Watch Negative Tuesday based on potential large loss exposures to Hurricane Katrina.

The affected companies include: The Allstate Corporation, Horace Mann Educators Corp., Montpelier Re Holdings Ltd., PXRE Group Ltd., and State Farm Mutual Automobile Insurance Co. (All affected ratings are listed below.)

Fitch has also reviewed the preliminary loss estimates for the major global reinsurers exposed to Katrina using the same methodology as discussed below for the North American based insurers and reinsurers. To date, Fitch does not believe the exposure of equity capital to Katrina-related losses for any of these entities would warrant a Rating Watch action. It appears that for those reinsurers and insurers rated by Fitch, Katrina losses will likely be absorbed by current one-year earnings.

Fitch believes that Hurricane Katrina will represent the largest insured loss in U.S. history, surpassing the Sept. 11, 2001 terrorist attack and Hurricane Andrew in 1992. Given the nature of this event, with widespread property devastation and flooding, it has been difficult to date for individual (re)insurers to produce credible loss estimates. However, industry-wide loss estimates for this event from catastrophe modeling firms have risen. Modeling firm Risk Management Solutions now estimates that insured losses from Hurricane Katrina are $40-$60 billion, of which $15-$25 billion are related to the New Orleans flooding. Prior industry-wide loss estimates generally fell at $35 billion or lower.

The determination to place the noted companies on Rating Watch is based on Fitch’s view that there remains considerable uncertainty regarding ultimate losses, and that these organizations appear to have an exposure that likely represents a material percentage of their equity base.

Fitch has looked at its property/casualty rating universe regarding potential exposures to Hurricane Katrina. Individual company loss exposure estimates developed and published by the companies themselves were considered when available, but were adjusted by Fitch to calibrate to an assumed $50 billion industry loss event. For companies without published estimates, Fitch examined market share data for these firms in the affected states (particularly LA and MS) for personal and commercial lines to allocate potential gross exposures to individual insurers, again assuming a $50 billion event. Then potential reinsurance and tax effects were estimated to derive net loss estimates. Fitch compared these net loss estimates relative to each insurer’s capital levels and earnings.

Fitch will continue to monitor events related to insured losses from Hurricane Katrina as other ratings may be affected as loss experience becomes more certain. It is possible additional companies will be placed on Rating Watch as more information becomes available. For the companies placed on Rating Watch today, the Rating Watch status will be resolved when actual losses can be better determined and following a review with management of any capital-raising plans to offset losses. It is possible that companies placed on Rating Watch will ultimately have their ratings affirmed if losses prove lower than current estimates, or lost capital is quickly replenished.

Fitch placed the following ratings on Rating Watch Negative Tuesday:

The Allstate Corporation

— Long-term issuer rating ‘A+’.

— $300,000,000 6.3% senior note due Aug. 1, 2018 ‘A+’;

— $550,000,000 5.375% senior note due Dec. 1, 2006 ‘A+’;

— $750,000,000 7.200% senior note due Dec. 1, 2009 ‘A+’;

— $350,000,000 6.125% senior note due Feb. 15, 2012 ‘A+’;

— $650,000,000 5.000% senior note due Aug. 15, 2014 ‘A+’;

— $250,000,000 6.125% senior note due Dec. 15, 2032 ‘A+’;

— $400,000,000 5.300% senior note due June 1, 2033 ‘A+’;

— $250,000,000 7.500% senior note due June 15, 2013 ‘A+’;

— $250,000,000 6.750% notes due May 15, 2018 ‘A+’;

— $250,000,000 6.900% notes due May 15, 2038 ‘A+’.

— Commercial paper issuer rating ‘F1’.

Allstate Financing II

— $200,000,000 7.830% due Dec. 1, 2045 ‘A’.

Allstate Insurance Company

Allstate County Mutual Insurance Co.

Allstate Indemnity Co.

Allstate P&C Insurance Co.

Allstate Texas Lloyd’s

Deerbrook Insurance Co.

— Insurer financial strength rating ‘AA+’.

Allstate Life Insurance Co.

Allstate Life Insurance Co. of NY

— Insurer financial strength rating ‘AA’.

Allstate Life Global Funding Trusts Program:

— $500,000,000 due May 29, 2009 ‘AA’;

— $300,000,000 due May 25, 2007 ‘AA’;

— $300,000,000 due July 30, 2007 ‘AA’;

— $300,000,000 due Sept. 22, 2006 ‘AA’;

— $250,000,000 due Sept. 22, 2009 ‘AA’;

— $85,000,000 due Nov. 25, 2016 ‘AA’;

— $275,000,000 due Jan. 25, 2008 ‘AA’;

— $225,000,000 due Jan 25, 2008 ‘AA’.

Horace Mann Educators Corp.

— Long-term rating ‘BBB+’;

— Senior convertible debt due 2032 ‘BBB+’;

— Senior debt 6 5/8% notes due 2006 ‘BBB+’;

— Senior debt 6.05% notes due 2015 ‘BBB+’.

Horace Mann Life Insurance Co.

Horace Mann Insurance Co.

Horace Mann Property & Casualty Insurance Co.

Teachers Insurance Co.

Horace Mann Lloyds

— Insurer financial strength ‘A+’.

Montpelier Re Holdings Ltd.

— Long-term rating ‘BBB-‘;

— $250,000,000 6.125% senior notes due Aug. 15, 2013 ‘BBB-‘.

Montpelier Reinsurance Ltd.

— Insurer financial strength ‘A-‘.

PXRE Group Ltd.

— Long-term issuer ‘BBB-‘.

PXRE Capital Trust I

— Trust preferred securities $100MM 8.85% due Feb. 1, 2027 ‘BB+’.

PXRE Reinsurance Company

PXRE Reinsurance Ltd.

— Insurer financial strength ‘A-‘.

State Farm Mutual Automobile Insurance Co.

State Farm Life Insurance Co.

State Farm Life and Accident Assurance Co.

— Insurer financial strength ‘AA+’.

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