S&P Lowers Western Mutual Rating

February 28, 2001

Standard & Poor’s has lowered its financial strength rating on Western Mutual Insurance Co. to triple-‘Cpi’ from double-‘Bpi.’

This rating action reflects continued deterioration in the company’s claims experience, leading to net losses in 1999 through to the third quarter of 2000. As a result, capital strength has been depleted to a level considered extremely weak.

The company, owned by its policyholders, provides accident and health coverage in Utah, Montana, Idaho, and Nevada. Business is principally derived from two sources: Western Petroleum Marketers Association, a trade association servicing the Rocky Mountain region; and Montana Retail Association, a coalition of Montana-based trade associations.

Major Rating Factors:

* The company has experienced exceptionally high losses in 1999 and into the third quarter of 2000, in comparison to its surplus level. Losses have amounted to $1.35 million in this period, on a capital base (as of Sept. 30, 2000) of $1.3 million.

* Capitalization has fallen to the very weak level, as indicated by Standard & Poor’s capital adequacy ratio, and financial strength is considered limited.

* The company’s scope of operation is limited, relying for the majority of its business on Western Petroleum Marketers Association and Montana Retail Association.

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