A.M. Best Affirms Executive Risk's "A" Rating On Announced Merger Agreement With Chubb.

OLDWICK, N.J.--(BUSINESS WIRE)--Feb. 8, 1999--A.M. Best Co. today affirmed its A (Excellent) rating on Executive Risk Group, Simsbury, Conn., and changed its outlook to positive. This action follows the recent announcement that the group has entered a definitive merger agreement with The Chubb Corp.

The transaction, which is valued at approximately $850 million, will be financed entirely through equity.

The improved rating outlook reflects the positive long-term implications of this strategic combination, which strengthens the group's leadership position in the highly specialized executive protection lines of business. Upon close of the transaction, operational management of Chubb's professional liability business will transfer to Executive Risk, providing synergistic and cross-marketing opportunities as benefits of combining each group's complementary products and distribution systems are realized. In addition, as a member of the Chubb group of companies with pro forma capital of $6.5 billion, Executive Risk's financial flexibility will be significantly enhanced.

The affirmation of Executive Risk's Excellent rating also acknowledges the group's strong and consistent operating performance, high-quality balance sheet and recognized specialty lines underwriting expertise. These strengths are derived from the group's continued commitment to underwriting integrity despite difficult market conditions, conservative operating strategies and differentiated marketing approach. This marketing approach has enabled Executive Risk to capitalize on underserved niche markets.

Executive Risk's conservatism is evident in its strong loss-reserve position, as corroborated by a leading actuarial firm, high-quality investment portfolio and significant reinsurance protections, all of which serve to minimize earnings volatility.

Offsetting these strengths, however, are the uncertainties associated with the group's potential exposure to Y2K liabilities, as well as the relatively immature status of its moderate-tailed casualty book of business due to rapid growth in new business classes. These concerns are partially allayed by Executive Risk's extensive risk mitigation efforts, which include increased underwriting diligence, claims-made coverages, occurrence/aggregate policy caps and broader reinsurance coverages to minimize exposures on higher-risk classes of business.

The Chubb Group's rating is unaffected by this announcement. The transaction is expected to close in the second quarter of 1999, subject to shareholder and regulatory approvals.

A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.