Fitch Boosts Transparency of Its North American Non-Life Insurance Ratings.

CHICAGO -- Fitch Ratings said today that it is implementing new ratings standards for North American based property/casualty insurers, U.S. title insurers and insurance brokers which will add greater transparency to the agency's insurance industry ratings. Fitch's new methodology, released in a special report entitled 'Insurance Industry: Global Notching Methodology', clearly delineates the impact of default risk and recovery given default on ratings.

Fitch is implementing these new ratings standards concurrently for most insurance sectors globally, following the publication of an exposure draft of the noted methodology report on Dec. 14, 2005 and a market feedback period. A summary of the major areas of feedback, and Fitch's responses, can be found in the report 'Responses to Feedback on Insurance Industry Notching Methodology' also published today and available on the Fitch Ratings web site at 'www.fitchratings.com'.

The new ratings methodology is designed to add greater transparency to Fitch's insurance industry ratings. This is accomplished by more clearly assessing the effect of default risk and recovery given default on ratings. Specifically, the new ratings standards precisely distinguish how default and recovery risk is influenced by various insurance regulatory standards around the world, and varying treatments with respect policyholder preference and payment restrictions between an operating company and holding company.

As part of the new methodology Fitch is assigning a new Issuer Default Rating (IDR) to essentially all debt issuing entities rated by Fitch. A list of newly assigned IDRs for North American insurance holding companies with property/casualty and title insurance operations appears near the bottom of this release.

The IDR is a pure measure of default risk at the entity level. Importantly, in most cases for debt issuing insurance holding companies in North America, the IDR is a notch higher than the existing unsecured senior debt rating. For example, if the IDR of the holding company is 'A', the unsecured senior debt rating is typically 'A-'.

This reflects Fitch's expectation that recoveries in the event of default will typically be below average, and thus the unsecured senior debt rating is 'notched down' from the IDR to reflect such recovery expectations. This recovery expectation reflects the nature of the insurance regulatory regime in property/casualty and title insurance that includes priority of policyholder interests in a default scenario. Fitch believes that this distinction between the IDR and senior debt rating provides significant value added information for investors not previously available.

For holding companies that primarily own Bermuda domiciled insurance subsidiaries, the notching spread between insurance company financial strength ratings and holding company debt ratings is typically narrower under this new methodology, compared with U.S. domiciled insurance subsidiaries, and is the primary reason for the rating revision listed below for XL Capital Ltd. This narrower notching is due largely to less restrictive regulation of upstream dividend payments by insurance companies in Bermuda, which provides greater freedom to provide cash flow for parent debt servicing needs.

For insurance brokers, IDRs are determined in accord with our notching and recovery guidelines for unregulated corporate issuers. As such, insurance broker IDRs are assigned at an equivalent level to unsecured senior debt issues, reflecting the flexibility of moving required funds for debt servicing from broker subsidiaries to parent holding companies, as well as an expectation of average recoveries for unsecured senior debt in the event of a default.

Greater details on Fitch's new guidelines governing notching of issue ratings relative to the IDR, as well as the notching between Insurer Financial Strength Ratings (IFS) at an operating company level and debt ratings at a holding company level are available in the noted methodology report.

All rating changes made today in implementing the new rating guidelines are being designated as 'revisions', as opposed to upgrades or downgrades. This is being done to make clear that the rating change is driven by a methodology change, as opposed to a change in Fitch's views on the fundamental credit profile of the entity or its rated issues.

The following ratings experienced upward revisions upon implementation of the new guidelines.

Fairfax Financial Holdings, Ltd(1)

TIG Capital Trust I to 'B' from 'B-'.

XL Capital Ltd

-- $745 million 5.25% senior notes due 2011 to 'A' from 'A-'.

-- $594 million 5.25% senior notes due 2014 to 'A' from 'A-';

-- $825 million 2.53% senior notes due 2009 to 'A' from 'A-';

-- $350 million 6.375% senior notes due 2024 to 'A' from 'A-';

-- 8% series A preference ordinary shares at to 'A-' from 'BBB+';

-- 7.625% series B preference ordinary shares to 'A-' from 'BBB+'.

XL Capital Finance (Europe) PLC

-- $255 million 6.58% senior notes due 2011 to 'A' from 'A-';

-- $600 million 6.50% guaranteed senior notes due 2012 to 'A' from 'A-'.

The following IDRs were assigned:

21st Century Insurance Group

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

-- Rating Outlook Stable.

ACE Ltd.

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

-- Rating Outlook Stable

ACE INA Holdings Inc.

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

-- Rating Outlook Stable

Alfa Corp.

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

-- Rating Outlook Stable

The Allstate Corporation(1)

-- Issuer Default Rating (IDR) 'AA-';

-- Rating Outlook Stable

American Financial Group, Inc.

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

-- Rating Outlook Stable

American Premier Underwriters, Inc.

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

-- Rating Outlook Stable

Aon Corporation

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable

Berkshire Hathaway Inc.

-- Issuer Default Rating (IDR) 'AAA';

-- Rating Outlook Negative

General Re Corp.

-- Issuer Default Rating (IDR) 'AAA';

-- Rating Outlook Stable

GEICO Corp.

-- Issuer Default Rating (IDR) 'AAA';

-- Rating Outlook Negative

The Chubb Corporation

-- Issuer Default Rating (IDR) 'AA-';

-- Rating Outlook Stable

Cincinnati Financial Corp.

-- Issuer Default Rating (IDR) 'AA-';

-- Rating Outlook Stable

Citizens Property Insurance Corp.

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

-- Rating Outlook Negative

CNA Financial Corporation

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Continental Corp. (The)

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Commerce Group, Inc.(1)

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable

Delphi Financial Group, Inc.

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable

Fairfax Financial Holdings Limited(1)

-- Issuer Default Rating (IDR) 'BB-';

-- Rating Outlook Stable

Fairfax, Inc.(1)

-- Issuer Default Rating (IDR) 'BB-';

-- Rating Outlook Stable

Crum & Forster Holdings Corp.(1)

-- Issuer Default Rating (IDR) 'BB-';

-- Rating Outlook Stable

TIG Holdings, Inc.(1)

-- Issuer Default Rating (IDR) 'BB-';

-- Rating Outlook Stable

Fidelity National Financial, Inc.

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Fidelity National Title Group, Inc.

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Fidelity Information Services 

-- Issuer Default Rating (IDR) 'BB-';

-- Rating Outlook Stable

The First American Corporation 

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Positive

Harleysville Group

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Hartford Financial Services Group, Inc.

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

-- Rating Outlook Stable

HCC Insurance Holdings, Inc.(1)

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

-- Rating Outlook Stable

Horace Mann Educators Corporation

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable

Infinity Property & Casualty Corporation

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable

LandAmerica Financial Group, Inc.

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable

Liberty Mutual Group, Inc.(1)

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Liberty Mutual Insurance Company(1)

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable

Markel Corporation

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Marsh & McLennan Companies, Inc.(1)

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Negative

Mercury General Corp.

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

-- Rating Outlook Stable

Nationwide Mutual Insurance Company 

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

-- Rating Outlook Stable

NYMAGIC, Inc.

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable

Ohio Casualty Corp.

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Positive

Old Republic International Corporation

-- Issuer Default Rating (IDR) 'AA-';

-- Rating Outlook Stable.

PMA Capital Corp.

-- Issuer Default Rating (IDR) 'BB-';

-- Rating Outlook Stable.

ProAssurance Corp.

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable.

The Progressive Corporation

-- Issuer Default Rating (IDR) 'AA-';

-- Rating Outlook Stable.

RLI Corp.(1)

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable.

SAFECO Corp.

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

-- Rating Outlook Stable.

Selective Insurance Group, Inc.

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

-- Rating Outlook Stable.

St. Paul Travelers Companies 

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

-- Rating Outlook Stable.

Travelers Insurance Group Holdings Inc.

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

-- Rating Outlook Stable.

Travelers Property Casualty Corp.

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

-- Rating Outlook Stable.

Unitrin, Inc.(1)

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable.

USAA Capital Corp.

-- Issuer Default Rating (IDR) 'AAA';

-- Rating Outlook Stable.

USI Holdings Corporation

-- Issuer Default Rating (IDR) 'BB-';

-- Rating Outlook Stable.

W.R. Berkley Corp.(1)

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable.

White Mountains Insurance Group, Ltd

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable.

Fund American Companies, Inc.

-- Issuer Default Rating (IDR) 'BBB+';

-- Rating Outlook Stable.

Willis North America Inc.(1)

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable.

XL Capital Ltd

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

-- Rating Outlook Stable.

XL Capital Finance(Europe) PLC

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

-- Rating Outlook Stable.

Zenith National Insurance Corp.

-- Issuer Default Rating (IDR) 'BBB';

-- Rating Outlook Stable.

ZCM Matched Funding Corp.

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

-- Rating Outlook Stable.

Zurich Capital Markets Inc.

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

-- Rating Outlook Stable.

All long-term issuer and short-term issuer ratings previously assigned in the North American property/casualty insurance, title insurance and insurance broker sectors are withdrawn.

The new methodology has not been implemented for the following organizations: American International Group, Inc. and The Hanover Insurance Group, Inc. for which non-traditional notching was used under the prior methodology, and for which Fitch plans to complete an updated analysis of the issuer prior to implementation of the new methodology. Fitch expects to have the new methodology in place for these companies by March 31, 2006.

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. Issuers denoted with a (1) did not participate in the rating process other than through the medium of their public disclosure.