A.M. Best Updates Debt Rating Methodology.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--July 17, 2003

A.M. Best Co. has released its revised debt rating methodology, which summarizes the relationship between financial strength ratings, issuer credit ratings and debt ratings that A.M. Best assigns to insurance organizations and their financial obligations. It also focuses on how the use of debt capital or other borrowings by insurance organizations can affect their ratings.

With the growing interest by non-policyholders in insurer creditworthiness, A.M. Best also is introducing an issuer credit rating, which is an opinion as to the overall creditworthiness of an insurer or insurance holding company from the perspective of its senior-most creditors. The assignment of an issuer credit rating serves as an integral transition from A.M. Best's traditional financial strength ratings scale to the credit rating scale, which is used in the capital markets.

The updated methodology also introduces revised notching guidelines, which reflect A.M. Best's view that the insurance industry requires wider notching between policyholder ratings and securities issued by insurance holding companies than has been the convention in the capital markets, particularly at the lower rating levels. This view is supported by the one-year to 20-year cumulative default probabilities constructed from A.M. Best's proprietary database, the actual recoveries of impaired entities at the operating company level, and the trend to greater regulatory intervention.

For more information on A.M. Best's rating methodology, or to download a copy of this report, visit www.ambest.com/ratings/index.html.

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.