A.M. Best Upgrades Rating of The Doctors Company Insurance Group and Assigns Rating to Northwest Physicians.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength rating (FSR) to A- (Excellent) from B++ (Very Good) for The Doctors Company Insurance Group (TDCG) (Napa, CA) and its members, which is led by The Doctors Company, An Interinsurance Exchange (The Doctors Company) (California). Concurrently, A.M. Best has assigned the above FSR of A- (Excellent) to The Doctors Company's recently acquired subsidiary, Northwest Physicians Insurance Company (Oregon). The outlook for the rating is stable.

These rating actions recognize TDCG's return to profitability, renewed underwriting discipline and strong overall capitalization, which includes a more robust reserve base and exceptional cash flows. The rating also considers all of the actions taken by management to realign the organization on its core business and operational strategies, and more importantly, the benefits gained from these efforts when evaluated on an accident year basis.

These positive rating factors are offset by the group's significant earnings volatility, adverse loss reserve development reported in prior years and the inherent challenges of being a leading medical malpractice insurer with regard to price competition and tort reform. Despite these factors, the rating outlook views TDCG's near-term prospects and capital formation as favorable. Further stabilization in loss reserve development is a key component as well.

Operating gains in 2004 and 2005 reflect TDGC's progress in each of the past four accident years and management's directive to exit non-profitable venues and lines of business, primarily non-affiliated reinsurance assumed. Changes in market conditions, stronger renewal pricing and decreased claim frequency have also played a major role. Retained earnings in those years also helped bolster capitalization to a level that more comfortably supports the current rating. Capitalization was further enhanced through the issuance of four, 30-year surplus debentures. Total capital raised through these private offerings was $48 million. Prior to this period, results were materially impacted by exposure growth and adverse loss reserve development.

The group rating considers the significant reinsurance protection provided by The Doctors Company, the subsidiaries role within the group and any implicit and explicit financial support to be provided by The Doctors Company in the future.

The FSR of B++ (Very Good) has been upgraded to A- (Excellent) for The Doctors Company Insurance Group and its following members:

--Professional Underwriters Liability Insurance Company

--Underwriter for the Professions Insurance Company

--The Doctors Company, An Interinsurance Exchange

The above FSR of A- (Excellent) has been assigned to Northwest Physicians Insurance Company.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

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.