Fitch Affirms Alfa's Ratings.

CHICAGO -- Fitch Ratings has affirmed the 'AA-' insurer financial strength (IFS) ratings of the Alfa insurance companies (Alfa Group or Alfa), see list below. Additionally, Fitch has affirmed the following ratings of Alfa Corporation (Alfa Corp):

--Issuer Default Rating (IDR) at 'A';

--Senior debt rating at 'A-';

--Commercial paper rating at 'F1'.

The Rating Outlook for all ratings is Stable.

The 'AA-' IFS rating of Alfa Group is, in part, based on Alfa Group's strong capitalization characterized by high risk based capital (RBC) ratios and low operating leverage ratios. Alfa Mutual Insurance Company, the pool's largest member as measured by statutory surplus, had an RBC ratio of 479% for year-end 2005 and a five-year average of 493%. Alfa Group also has very low operating leverage for a personal lines insurer, as statutory net premiums written to surplus was 0.52 times (x) for 2005.

Partially offsetting Alfa's strengths is the group's below average profitability and elevated catastrophe risk due to the lack of geographic diversification. Fitch estimates that Alfa's third quarter 2006 combined ratio was a 105.7% almost a full 14 percentage points higher than both the industry and personal lines aggregate despite a relatively mild catastrophe season. Fitch notes that Alfa will encounter negative rating pressure in the near term if profitability continues to lag peers and industry averages.

Fitch's affirmation of Alfa Corp's 'A-' debt rating incorporates Alfa Corp's solid balance sheet, strong capitalization at the operating company level, and adequate loss-reserving levels. Additionally, investors in Alfa Corp's commercial paper have the added benefit of a guarantee commitment from Alfa Mutual Insurance Company and Alfa Mutual Fire Insurance Company.

Alfa Corp reported GAAP consolidated assets of $2.5 billion, total shareholder equity of $799 million, and a debt to capital ratio of 27.9%, as of Sept. 30, 2006. Additionally, Alfa Corp continues to demonstrate strong interest coverage capacity with an earnings based interest coverage ratio of 17.3x.

Alfa Group is the second largest personal automobile and homeowners insurance writer in Alabama based on premiums written. The company provides a full array of personal lines insurance coverage in Alabama, Mississippi, Georgia, North Carolina, and Virginia, in addition to nonstandard auto in eight other states. Primary operations are concentrated in personal automobile insurance. The company also has a life insurance operation.

Fitch has affirmed the following ratings with a Stable Outlook:

Alfa Corporation:

--$70 million variable-rate note due June 1, 2017 affirmed at 'A-';

--Commercial paper affirmed at 'F1';

--Issuer Default Rating affirmed at 'A'.

The insurer financial strength ratings of the following entities have been affirmed at 'AA-' with a Stable Outlook:

--Alfa Insurance Corporation;

--Alfa General Insurance Corporation;

--Alfa Mutual Fire Insurance Company;

--Alfa Mutual General Insurance Company;

--Alfa Mutual Insurance Company;

--Alfa Specialty Insurance Corporation;

--Alfa Alliance Insurance Corporation;

--Alfa Life Insurance Corporation.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria, and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance, and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.