A.M. Best Takes Various Rating Actions on Trustmark Insurance Group; Outlook Positive.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of B++ (Very Good) and upgraded the issuer credit ratings (ICR) to "bbb+" from "bbb" of Trustmark Insurance Company (Trustmark Insurance) and Trustmark Life Insurance Company (together known as Trustmark). The FSR outlook has been revised to positive from stable and the outlook for the ICRs remains positive. Additionally, A.M. Best has upgraded the debt rating to "bb" from "bb-" on $75 million trust preferred securities due 2035 for Trustmark Finance Trust I. The outlook for this rating is also positive. Both insurance companies are domiciled in Lake Forest, IL.

The upgrade of the ICRs and the assignment of a positive outlook to the FSR reflect the organization's strengthened capital position following the recent sale of its ownership in Private Health Care System (PHCS), a national PPO network, and the group's continued favorable overall operating gains. Trustmark has remained disciplined in writing new business, as some of its core products lines experience increasing competition. Additionally, Trustmark's debt-to-capitalization level is favorable for its current debt rating.

Trustmark continues to have uncertainties associated with its involvement in a troubled workers' compensation reinsurance pool (WEB). One particular reinsurance agreement (Superior National) has the most potential liability for Trustmark Insurance. Trustmark's ultimate liability for WEB will be determined by the courts. The dispute with its WEB reinsurance partners has been ongoing for many years. Following an unfavorable arbitration ruling nearly two years ago, which caused Trustmark Insurance to put up additional reserves, Trustmark has taken steps to bolster its capital position. A.M. Best believes the company is in a position to withstand the current projected worst case scenario without endangering its current ratings. Even so, A.M. Best will not be entirely comfortable until the Superior National liability is resolved.

In addition to WEB, A.M. Best will continue to monitor Trustmark's results. The organization will need to continue to report favorable operating results, continue exhibiting discipline in managing profitability in its group medical business and maintain the strength of and its commitment to its voluntary business. Additionally, A.M. Best wants more time to observe a key affiliate, CoreSource (a third party administrator), which experienced a noticeable decline in its operating results in 2006, before consideration can be given to further rating improvements for Trustmark.

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