A.M. Best Downgrades Rating of EIG-Ansvar Limited.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Dec. 10, 2003

A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of EIG-Ansvar Limited (New Zealand). The outlook is stable.

The downgrade reflects the company's status as a strategically important subsidiary of its ultimate parent company, Ecclesiastical Insurance Office Plc (United Kingdom)--currently rated A- (Excellent)--and as such, its financial strength rating is limited to that of its parent's. Supporting factors for the current rating level include its excellent risk-based capitalization, good overall financial performance and good domestic business position.

Excellent risk-based capitalization--According to A.M. Best's capital model, EIG-Ansvar has risk-based capital commensurate with the current rating level. Historically, capital has increased through the retention of earnings, and the company carries no debt. A.M. Best believes EIG-Ansvar will likely continue to increase its capital in the future through continued, albeit slower, increases in premium and after-tax profits.

Good overall financial performance--A.M. Best expects an improvement in the expense ratio at year-end 2003, following a deterioration in profits over the past three years. The loss ratio has been maintained at an average of 54.5% over the same period, and the company has achieved positive overall returns in each year. A conservative investment portfolio comprised mostly of government bonds has produced good steady returns, which have countered negative technical results. A.M. Best projects EIG-Ansvar to continue to produce positive overall earnings as a result of consistently favorable investment returns.

Good domestic business position--EIG-Ansvar is the leading insurer of religious and community groups in New Zealand. It operates in a niche market, which faces little competition and maintains strong relationships with its customers. Through increased pricing and policy counts, premiums have grown at a compound annual growth rate of 25.3% over the last five years. As the company's commercial portfolio is an increasing dominant part of its total business, and since these rates are holding, A.M. Best expects EIG-Ansvar to maintain its good business profile.

Expectations:

-- Risk-based capitalization is expected to be maintained at the

current rating level.

-- The company will maintain its conservative investment

strategy, which will likely yield steady annual investment

returns of 5% - 10%.

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 www.ambest.com.