A.M. Best Assigns Ratings to Wind River Insurance Company, Ltd. and Wind River Insurance Company -Barbados- Ltd.; Removes Rating of United National Group from Under Review.

OLDWICK, N.J. -- A.M. Best Co. has assigned financial strength ratings of A- (Excellent) to Wind River Insurance Company, Ltd. (Hamilton, Bermuda) and A (Excellent) to Wind River Insurance Company (Barbados) Ltd. These ratings have been assigned a stable outlook. Concurrently, A.M. Best has also affirmed the financial strength rating of A (Excellent) of United National Group (United National) (Bala Cynwyd, PA) (NASDAQ: UNGL). This rating has been removed from under review with developing implications.

The initial ratings are based on the historical profitability of United National's core domestic book of specialty admitted and surplus lines business and the solid capitalization of both companies. United National Group is acknowledged as a leader in the domestic surplus lines market ranking 16th in the United States among surplus lines groups in terms of direct premium written as of the end of 2003. In addition, both companies will benefit from the balance sheet strength of the ultimate parent company, United National Group, Ltd. Wind River Insurance Company Ltd. has been established to serve as the primary reinsurer of United National Group, receiving a 60% cession of the group's net retained premium. In addition to the ceded business received from its onshore affiliates, Wind River Insurance Company, Ltd. will write a small portion of unaffiliated premium, similar to the specialty business that it assumes from the onshore companies. The company will then retrocede approximately 35% of its business to Wind River (Barbados) with this business comprising all that Wind River (Barbados) will write.

The ratings also reflect the fact that the offshore entities will be run by the long-term president and chief executive officer of United National Group who presided over the company's operations for almost two decades, generating significant operating profits annually. The business model used for writing the unaffiliated business in Wind River Insurance Company, Ltd. will mirror that of the domestic group in terms of appetite.

The rating for United National Group and its subsidiary companies is being taken from under review after A.M. Best's analysis of the potential impact of the announced merger with Penn-America Group, Inc. (Penn America) (Hatboro, PA) (NYSE: PNG) through a taxable exchange of stock. A.M. Best believes that the solid operating performance and considerable balance sheet strength of the group from the parent company level through the insurance subsidiaries is not likely to change materially to the point of causing a change in the financial strength rating or rating outlook, regardless of the outcome of the merger.

As is its customary practice, A.M. Best expects to conclude its review of Penn-America Group, Inc. after the final disposition of the merger. At this time, the rating of Penn America will remain under review with developing implications.

The financial strength rating of A- (Excellent) has been assigned to the following subsidiary of United National Group, Ltd.:

--Wind River Insurance Company, Ltd.

The financial strength rating of A (Excellent) has been assigned to the following subsidiary of United National Group, Ltd.:

--Wind River Insurance Company (Barbados) Ltd.

The financial strength ratings of A (Excellent) of the following subsidiaries of United National Group have been affirmed and removed from under review:

--Diamond State Insurance Company

--United National Casualty Insurance Company

--United National Insurance Company

--United National Specialty Insurance Company

For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies, groups and industry composites, please visit http://www.ambest.com/pc.

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