A.M. Best Upgrades Rating for Ancon Group.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 1, 2001

A.M. Best Co. has upgraded the financial strength rating from A (Excellent) to A+ (Superior) for the Ancon Insurance and Petroleum Casualty Group.

This rating applies to Ancon Insurance Company, Inc. (Ancon), Vermont and its reinsured affiliate, Petroleum Casualty Company, Texas.

This rating action reflects the group's superior capitalization, consistently strong operating results, sound risk management capabilities and conservative balance sheet strategies. Also, the rating considers the level of commitment on the part of its parent, Exxon Mobil Corporation (ExxonMobil), whose management incorporates the group as a core element in the overall risk management program of the corporation. These factors have provided strong growth to the group's equity base and as one of the largest captives in the United States, Ancon benefits from its captive operating history of over fifty years.

ExxonMobil maintains a very conservative level of financial leverage and cash coverage of debt obligations has been consistently high, stemming from sustained profitability. A consolidation of Ancon with Bluefield International Insurance Inc., a result of the merger between Exxon and Mobil Corps., provides substantial cost savings to the enterprise. As such, the rating is derived from the consolidated financial results of these units, including Bluefield , Mobil's former captive). Ancon will maintain a significant capital base to support this expansion.

The group accepts insurance risks only from ExxonMobil and its worldwide affiliates, providing specialized direct and assumed property and casualty coverages. Although most of the group's coverages are high hazard, they are tightly underwritten and loss controlled as evidenced by an average loss ratio of less than 35% (proforma basis) over the past five years. The group's balance sheet is further supported by reinsurance from high quality carriers and loss reserves are well within the actuary's acceptable range.

These positive rating factors are partially offset by the group's high net loss potential stemming from a single, severe occurrence. Nevertheless, this is somewhat mitigated by the excellent loss history, favorable geographic spread of risk and the parent's history of supporting the group's strong surplus position. Additionally, Ancon has some risk due to insuring the parent's share of joint ventures. Although, the risk from joint ventures is allayed, as ExxonMobil primarily participates with other major companies in the oil industry. Also noteworthy is the significant percentage of assets loaned to a subsidiary of ExxonMobil. However, these investments are very liquid and are guaranteed by the parent.

Finally, Ancon is somewhat exposed to pollution liabilities; although, its liability potential is significantly alleviated since Exxon's U.S. facilities have been self-insured for over a decade, with all North American environmental claims prior to 1993 commuted. Similarly, Mobil commuted environmental liabilities with Bluefield's primary insurers. Ancon's remaining environmental exposures emanate from other less environmentally litigious countries and from a modest amount of closely monitored run-off liabilities related to an old third party claims. A.M. Best believes the group is well positioned to sustain a superior level of operating performance due to its demonstrated risk management expertise and conservative underwriting criteria.

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.