A.M. Best Assigns Ratings To Esurance Insurance Group; Withdraws Ratings of Esurance Insurance Company of New Jersey.

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating (ICR) of "a-" to Esurance Insurance Group (Esurance). Additionally, A.M. Best has downgraded the FSR to A- (Excellent) from A (Excellent) and the ICRs to "a-" from "a" of Esurance Insurance Company (EIC) (Madison, WI) and Esurance Property and Casualty Insurance Company (EPC) (San Francisco, CA). Previously, EIC and EPC, the members of Esurance, were rated A (Excellent), based upon the FSRs of their affiliated reinsurer, Sirius International Insurance Corporation (Sirius) (Stockholm, Sweden) and their former affiliated reinsurer, OneBeacon Insurance Company (OneBeacon) (Philadelphia, PA). A.M. Best has also withdrawn the FSR of A (Excellent) and the ICR of "a" and assigned a category NR-3 (Rating Procedure Inapplicable) to Esurance's affiliate, Esurance Insurance Company of New Jersey (EIC NJ) (Madison, WI). The outlook for all ratings is stable.

These rating actions reflect Esurance's current business profile given the recent change in EIC's affiliated reinsurance arrangements from an 85% quota share to the affiliated Sirius in late 2006 to an 85% quota share evenly split between Sirius and the affiliated Folksamerica Reinsurance Company (Folks Re) (New York, NY), effective January 1, 2007.

The ratings recognize Esurance's favorable direct underwriting results, strong current and projected consolidated risk-adjusted capitalization and the ongoing support of its ultimate parent, White Mountains Insurance Group Ltd. (WTM) (Hamilton, BM) [NYSE: WTM].

Offsetting these positive rating factors is Esurance's historically high rate of growth, significant reinsurance dependence and historical operating results less favorable than their peer group. The group cedes 85% of its direct premiums under a quota share agreement with two separate companies that are subsidiaries of WTM. The stable outlook reflects A.M. Best's view that capitalization will remain strong and both underwriting and overall earnings will improve in the medium term.

The withdrawal of EIC NJ's ratings acknowledge the termination of its 100% reinsurance treaty with its affiliate, OneBeacon, during 2006 and its sale by OneBeacon to EIC on July 31, 2006. While EIC NJ has been dormant since 2005, plans call for the company to begin writing private passenger auto insurance for New Jersey residents and to cede virtually all of this business to EIC later in 2007.

Esurance only writes private passenger auto insurance, which is sold through its web site. Its highly automated operating systems have facilitated significant growth over a five-year period. Esurance utilizes a rules-based underwriting methodology with claims offices strategically located throughout the country.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.