Fitch Assigns NYMAGIC 'BBB-' Debt Ratings.

CHICAGO -- Fitch Ratings has assigned a 'BBB-' long-term issuer rating to NYMAGIC, Inc. (NYSE:NYM). In addition, Fitch has assigned a 'BBB-' rating to NYMAGIC's outstanding $100 million of 6.5% senior notes due 2014. The Rating Outlook is Stable.

The ratings reflect NYMAGIC's competitive position in ocean marine insurance, favorable operating results, conservative reserving, and low, albeit increasing, operating leverage. Weighted against these positives are uncertainties with respect to the company's expansion into specialty other liability lines, sizable reserves in exited business, and significant reinsurance leverage.

NYMAGIC has a solid, niche position in ocean marine commercial insurance, with a primary focus on marine liability. The ocean marine line of business generally has a low frequency of claims but of a high severity, and, thus, underwriting results can vary significantly from period to period, although NYMAGIC has successfully utilized reinsurance to limit its maximum loss.

NYMAGIC has been able to consistently achieve favorable underwriting results in recent years, posting GAAP combined ratios under 100%, including 98.8% for full year 2004 and 99.5% for the first quarter of 2005. The notable exception was in 2001, when the company suffered losses in its aircraft line due to the events of Sept. 11 (World Trade Center event) and in its London operations. Both of these business lines were subsequently discontinued in 2002.

NYMAGIC also opportunistically writes nonmarine liability insurance, including professional liability, excess workers compensation, and commercial auto liability. Fitch will carefully monitor the company's underwriting performance in the other liability line of business, as it has grown considerably in recent years to account for 36% of total company net premiums written in 2004, up from 23% in 2003 and 9% in 2002.

Overall, Fitch views the company as having conservative reserves, particularly in core lines, where the company has consistently posted favorable prior year reserve development. However, the company still has a sizable amount of reserves in run-off aircraft lines, accounting for 31% of gross and 18% of net reserves at Dec. 31, 2004. As a result, Fitch has some concern about the potential for adverse reserve development as these reserves run off over the next several years, although the company did experience favorable development in 2004 on its World Trade Center event reserves, that were booked at full limits and account for a majority of the company's aircraft reserves.

Operating leverage is conservative with a net written premium to surplus ratio of 0.75 times (x) at year-end 2004. This ratio has increased over the past five years from 0.19x at year-end 1999, as the company has added about $100 million in business writings, with statutory surplus declining slightly over the same period, as the company has paid out a significant amount of dividends to the holding company. Fitch expects the company to maintain operating leverage of 1.0x or lower, with surplus at current levels or higher.

NYMAGIC uses a significant amount of reinsurance to manage its overall risk and enable the company to compete with larger insurance companies. As a result, the company's reinsurance recoverables were relatively high at 142% of surplus as of Dec. 31, 2004, although down considerably from levels in 2001 and 2002. In addition, about 40% of the recoverables are secured by letters of credit or funds withheld and the overall credit quality is good.

At March 31, 2005, NYMAGIC's debt to total capital was 30%, which is within Fitch's 26%-30% expectation range for the current rating.

NYMAGIC, Inc. is a publicly traded holding company that owns and operates two specialty insurance companies, New York Marine And General Insurance Company and Gotham Insurance Company, an excess and surplus lines company. NYMAGIC, Inc. also owns three entities that underwrite solely for the insurance companies, Mutual Marine Office, Inc., Pacific Mutual Marine Office, Inc., and Mutual Marine Office of the Midwest, Inc.

The following ratings for NYMAGIC, Inc. have a Stable Rating Outlook:

--Long-term issuer assigned 'BBB-';

--$100 million 6.5% senior notes due March 15, 2014 assigned 'BBB-'.