A.M. Best Special Report: U.S. Hurricane Catastrophe Review--One Blow Away From $6 Gas.

OLDWICK, N.J. -- Headline of release should read A.M. Best Special Report: U.S. Hurricane Catastrophe Review--One Blow Away From $6 Gas (sted A.M. Best Special Report: U.S. Hurricane Catastrophe Review -- One Blow Away From $10 Gas).

The corrected release reads:

A.M. BEST SPECIAL REPORT: U.S. HURRICANE CATASTROPHE REVIEW--ONE BLOW AWAY FROM $6 GAS

A well-aimed hurricane in the Gulf of Mexico could couple staggering insured catastrophe losses with severe economic disruptions as the storm tears through the dense, onshore and offshore infrastructure of the region's all-important petroleum industry. Hurricanes Katrina and Rita gave a taste of the possibilities in 2005. Now, forecasts for the upcoming season suggest the quiet passage of 2006 may have been a greater aberration than was the mayhem of 2005, given current, long-term atmospheric trends.

The impact of a possible mega-catastrophe in the Houston area would include financial stress for certain property/casualty insurers, particularly those companies with a Vulnerable Best's Rating (B and below) and some insurers without a Best's Rating, according to a new special report from A.M. Best Co. Also, disruption to the energy markets and prices could roil the financial markets and dampen the economy, with mixed

implications for the broad insurance industry.

The 2007 annual hurricane catastrophe review looks at the potential impact of a mega-hurricane hitting the Galveston/Houston area. Beyond the scope of potential human and property losses are significant risks to the U.S. and global economy and financial markets from damage to U.S. energy facilities.

Leading catastrophe modelers--AIR Worldwide Corp., EQECAT Inc. and Risk Management Solutions Inc.--provided A.M. Best with simulated insured losses or background material on how a potential hurricane could affect the Gulf and surrounding energy infrastructure.

The two Category 5 hurricanes modeled by AIR could produce insured losses of $120 billion. The Category 5 hurricane modeled by RMS yielded estimated insured losses of $163.2 billion, including $12.2 billion of offshore platform industry damage, not accounting for limits and deductibles.

EQECAT provided a storm intensity map of the actual 1900 Galveston Hurricane, which is estimated to have made landfall as a Category 4. With caveats as to the limited availability of insurance coverage data from captive insurers along the Houston Ship Channel, EQECAT estimates that a replay of the 1900 catastrophe would generate roughly $25 billion to $30 billion of insured losses in today's environment.

Two weeks before the start of the 2007 hurricane season, gasoline prices rival the highs reached immediately after Katrina two years ago. A major hurricane hit on Gulf energy facilities--even the suggestion of a developing hurricane headed in that direction--could push energy prices significantly higher and disrupt the economy.

A Category 5 storm moving on Houston through the northern Gulf would dwarf energy industry disruptions from Katrina and Rita. Forty percent of U.S. refinery production could be shut, as well as nearly all offshore production facilities. In the short term, a spike in gasoline prices proportionate to that seen as Katrina targeted the Gulf and made landfall would take the national average for all grades within striking range of $5 a gallon. In a protracted disruption to supplies, $6 a gallon or more would not be out of the question.

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.