[0] S&P Raises Peerless Insurance/Pool Cos. Rtg to `BBBpi'.

Business Editors

NEW YORK--(BUSINESS WIRE)--Standard & Poor's

Sept. 18, 2000-- Standard & Poor's today raised its financial strength rating on Peerless Insurance Co. (Peerless) and its related pool members (see list) to triple-'Bpi' from double-'Bpi'. The one exception is Atlas Assurance Co. of America , the rating of which remains unchanged at triple-'Bpi'. The rating action is based on the pool's improved operating performance and extremely strong capitalization. Peerless mainly writes private passenger automobile and homeowners insurance, and its products are distributed primarily through independent general agents.

Based in Keene, N.H. and licensed in 49 states and the District of Columbia, the company derives about 73% of its business from its major states of operation--New Hampshire, North Carolina, New York, Connecticut, and Maine. It began business in 1903.

Peerless is is a member of a group of affiliated insurers owned by LIH US P&C Corp., of which all the outstanding shares are owned by Liberty Insurance Holdings Inc. (formerly Guardian Royal Exchange Holdings Inc.), an insurance holding company incorporated in Delaware, of which all the outstanding shares were purchased by Liberty Mutual Insurance Co. (financial strength rating double-'A'-minus) on May 10, 1999.

Major Rating Factors:

-- Capitalization was extremely strong at year-end 1999, as indicated by a Standard & Poor's capital adequacy ratio of 207.5%. The company's surplus, which stood at $203.2 million at year-end 1999, has grown at a compound annual rate of 9.0% since 1992.

-- Operating performance has been good, with the time-weighted return on revenue from 1996 to 1999 at 5.1%.

-- The pool's investments are conservative. Unaffiliated common stock investments represented only 1.5% of policyholder surplus at year-end 1999, and high-grade bonds, 99.5%.

-- The pool's two-year reserve development ratio has been favorable but volatile, with an average reserve release of 22.2% with respect to surplus since 1995. The redundancy ratio has ranged between 3.6% and 36.3% in the last five years.

Pool members:
  Peerless Insurance Co.          (NAIC:24198)      31.06%
  Indiana Insurance Co.           (NAIC:22659)      27.78%
  Atlas Assurance Co. of America  (NAIC:18333)      27.36%
  Consolidated Insurance Co.      (NAIC:22640)       4.90%
  Excelsior Insurance Co.         (NAIC:11045)       4.90%
  The Netherlands Insurance Co.   (NAIC:24171)       3.27%
  America First Insurance Co.     (NAIC:12696)       0.73%

'pi' ratings, denoted with a 'pi' subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a 'pi' subscript. 'pi' ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a 'pi' subscript are not subject to potential CreditWatch listings.

Ratings with a 'pi' subscript generally are not modified with 'plus' or 'minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said. --- CreditWire.