A.M. Best Downgrades and Withdraws Ratings of Royal & SunAlliance USA Insurance; Removes From Under Review.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength ratings (FSR) to C+ (Marginal) from C++ (Marginal) and the issuer credit ratings (ICR) to "b-" from "b" for the Royal & SunAlliance USA Insurance Pool (R&SA USA Pool) (Wilmington, DE) and its members, as well as its separately rated affiliate, Royal Surplus Lines Insurance Company (RSLIC) (Wilmington, DE). On March 3, 2007, R&SA USA Pool's name was changed to Arrowpoint Capital Pool (Arrowpoint Pool) (Wilmington, DE). The ratings have been removed from under review with developing implications and assigned a negative outlook.

Subsequently, A.M. Best has withdrawn the FSRs and ICRs and assigned a category NR-4 (Company Request) to RSLIC and the members of the Arrowpoint Pool. Concurrently, A.M. Best has withdrawn the FSR and ICR and assigned a category NR-5 (Not Formerly Followed) to Arrowpoint Pool. These rating actions reflect management's decision to withdraw from A.M. Best's interactive rating process.

The Arrowpoint Pool includes Royal Indemnity Company and Security Insurance Company of Hartford. These two companies, along with RSLIC, have been in run-off since 2003. On March 3, 2007, Royal & Sun Alliance Insurance Group plc (United Kingdom) [LSE: RSA] completed the sale of its U.S. operations to Arrowpoint Capital Corporation (Arrowpoint Capital), a registered Delaware corporation founded by Royal & Sun U.S. senior managers and outside directors.

As part of the transaction, the former U.K. parent contributed $287.5 million in additional capital to the group. Arrowpoint Capital acquired the U.S. operations for $300 million in deferred consideration, payment of which will be based on the future performance of the run-off.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

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.