A.M. Best Upgrades Ratings of Subsidiaries of Northbridge Financial Corporation.

OLDWICK, N.J. -- A.M. Best Co. has upgraded the financial strength ratings (FSR) to A (Excellent) from A- (Excellent) and issuer credit ratings (ICR) to "a" from "a-" of Markel Insurance Company of Canada (Markel) (Toronto, Ontario), Federated Insurance Company of Canada (Federated) (Winnipeg, Manitoba), Commonwealth Insurance Company (Vancouver, B.C.), Commonwealth Insurance Company of America (Seattle, WA), Lombard General Insurance Company of Canada (Lombard General) and Zenith Insurance Company (both of Toronto, Ontario). Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and the ICR of "a-" of Lombard Insurance Company (Toronto, Ontario). In addition, A.M. Best has upgraded the ICR to "bbb" from "bbb-" of Northbridge Financial Corporation (Northbridge). All the above companies are subsidiaries of Northbridge. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The rating upgrades of the Northbridge subsidiaries reflect their positive 10-year average underwriting and operating performance, which favorably compares with similarly rated insurers, long-term sustainability of financial performance, quality management teams, very favorable reserving trends overall and specific to each subsidiary, niche business focus, capital levels, which exceed the range required for the ratings and above average long-term investment results.

A.M. Best believes that these positive rating factors collectively have and will continue to result in a sustained positive market reputation, competitive business positioning and above average operating profitability. Furthermore, the ratings consider the position these groups maintain within the Northbridge organization and the implicit and explicit support of Northbridge.

A.M. Best recognizes the material earnings volatility that resulted from Commonwealth's catastrophe exposure to hurricanes Katrina, Rita and Wilma and the significant negative impact these hurricanes had on both Commonwealth's and Northbridge's consolidated financial results in 2005 and 2006. The losses emanated mainly from Commonwealth's energy and international business segment, which has substantially been exited and is in run off, particularly the wind exposed Gulf marine business. Commonwealth and Northbridge reacted promptly, reducing future earnings volatility through the reduction of underwriting exposures and policy limits related to U.S. catastrophe exposures and through the contribution of a modest capital infusion in 2006. A.M. Best believes, however, that Commonwealth's business profile and model continue to incorporate an elevated degree of risk in relation to its sister Northbridge companies and maintains a dependence--albeit reduced--on reinsurance. For these reasons, the ratings of Commonwealth received a lift from the Northbridge enterprise.

The ratings of Markel, Federated and Lombard General acknowledge their respective niche profiles, well respected franchises, consistent long-term earnings capability and conservative reserve cultures. Markel's strong long-term results have benefited from its positive reputation as Canada's premier transportation insurer, its quality management team, underwriting discipline, contained average policy limits and numerous innovative value added products and services. Federated's excellent results well reflect management's knowledge of its customer base, specialized products and services, limited catastrophe exposure, trade association relationships and benefits of a direct sales force, all of which support high retentions. Lombard General's performance has been supported by its broad based commercial lines targeted at small and mid-sized businesses, intentioned specialty lines, commercial trade groups and associations, as well as selected large Canadian businesses. The rating affirmations for Lombard acknowledge the negative operating performance, which resulted from continued commercial liability prior year reserve development. A.M. Best believes that each of these business segments will maintain underwriting discipline in the current increasingly competitive market, appropriate capital levels and above average financial performance over the long term.

The upgrade of the ICR of Northbridge reflects its lack of financial leverage, the diversified nature of its markets and therefore earnings, its very stable balance sheet, quality reinsurers and projected reduced underwriting and catastrophe exposures at Commonwealth. Northbridge's annual cash needs primarily are its shareholder dividend payments, which are covered through subsidiary dividend payments. The capital levels of its subsidiaries comfortably allow for these payments.

The ICR of "bbb-" has been upgraded to "bbb" for Northbridge Financial Corporation.

The FSR has been upgraded to A (Excellent) from A- (Excellent) and the ICRs to "a" from "a-" for the following operating subsidiaries of Northbridge Financial Corporation:

* Commonwealth Insurance Company

* Commonwealth Insurance Company of America

* Federated Insurance Company of Canada

* Lombard General Insurance Company of Canada

* Markel Insurance Company of Canada

* Zenith Insurance Company

The FSR of A- (Excellent) and ICR of "a-" have been affirmed for Lombard Insurance Company.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.