A.M. Best Revises Year-End 2008 Projections for the U.S. P/C Industry.

OLDWICK, N.J. -- A.M. Best Co. has today reported a revised year-end 2008 forecast for the U.S. property/casualty industry's underwriting results, adjusting the combined ratio estimate for the overall industry in addition to the personal lines segment, commercial lines segment and U.S. reinsurance segment. Due to continued price softening, challenging market conditions, unusually high catastrophe losses in the first half of the year and significant underwriting losses reported by mortgage and financial guaranty insurers, A.M. Best believes the overall combined ratio will increase to 103.2, up from the initial projection of 98.6 published in the January 2008 Review/Preview forecast. For the first six months of 2008, catastrophe and storm losses added approximately five points to the industry's overall combined ratio, while losses linked to mortgage and financial guaranty insurers added an estimated two points. In addition, the revised outlook estimates that net premiums written (NPW) will decrease 0.7%, relatively unchanged from the initial projection of a 0.6% decrease.

Personal Lines Segment

A.M. Best has revised the personal lines segment's NPW projection to an increase of 1.0% from the initial forecast of 1.4%. This reduction reflects slower than anticipated rate increases in the personal auto line of business and a modest offset associated with reinsurance reinstatement provisions for catastrophe-prone property writers. Although the rate of premium growth is trending slightly lower than anticipated, it appears underlying loss cost trends are relatively stable. A.M. Best believes the segment's combined ratio will increase to 102.5 at year-end 2008, up from the initial forecast of 99.5. The revised combined ratio is largely the result of unprecedented catastrophic activity in the first half of the year, particularly with regards to the frequency of events in the Midwest, as well as hurricane activity along the Gulf Coast.

Commercial Lines Segment

Based on developments within the commercial lines segment during the year, A.M. Best is now projecting the segment's NPW will decrease approximately 3.0 % compared with the initial forecast that called for a 2.3% decrease. Furthermore, with continued pressure on pricing along with significant losses reported by mortgage and financial guaranty insurers, A.M. Best is now projecting the segment's combined ratio will be 104.0 for calendar year 2008, up from the initial projection of 97.5. The increase primarily reflects unprecedented underwriting losses reported by mortgage and financial guaranty insurers, which added approximately 5.0 points to the segment's combined ratio during the first half of 2008.

U.S. Reinsurance Segment

A.M. Best is revising the segment's NPW projection to an increase of 4.0% from a reduction of 5.0%, based largely on growth at National Indemnity Company; driven by a quota share agreement with Swiss Reinsurance Company; increased retentions of on-shore subsidiaries that have reduced cessions to off-shore parents; considerable reductions by several carriers reflective of soft markets, especially within U.S. casualty reinsurance; and what A.M. Best believes to be indications of conservative underwriting. Additionally, A.M. Best is revising the segment's year-end 2008 combined ratio to 103.0 from the initial forecast of 99.0. This revision reflects the deterioration of the segment's mid-year 2008 underwriting results, estimated impact of losses related to Hurricane Ike and a reduced amount of favorable loss reserve development expected for the remainder of the year.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.