Fitch Ratings Affirms R.V.I.'s 'A+' IFS Ratings.

Business Editors

Fitch Ratings has affirmed the 'A+' insurer financial strength ratings of R.V.I. Guaranty Co., Ltd. (R.V.I. Guaranty) and its subsidiary, R.V.I. America Insurance Co. (R.V.I. America), referred to together as The R.V.I. Group. The Rating Outlook is Stable.

Rationale for the rating includes The R.V.I. Group's dominant market position in the residual value insurance industry, solid overall underwriting performance, strong capitalization and quality management team. Partially offsetting these positives are concentration among key insureds and stability of capital.

The R.V.I. Group is recognized as a leading provider of residual value coverage worldwide for clients that include major financial institutions, leasing companies and equipment manufacturers. Current ownership of R.V.I. Guaranty is split evenly between wholly owned subsidiaries of Quantum Industrial Partners, LDC and CNA Financial Corp (CNA).

The R.V.I. Group focuses on three main asset classes for residual value insurance - passenger vehicles, commercial equipment and commercial real estate. Management and staff have extensive experience with the insured assets that serves as an important competitive advantage. The R.V.I. Group is also looking to build on its expertise in asset valuation to develop and offer a broader array of products that meet the needs of companies to transfer risk to third parties and improve the overall efficiency of financing transactions.

The company takes a very conservative approach to underwriting. Policies are, for the most part, underwritten to a zero-loss standard, net of recoveries, such that the probability of loss is remote. As a result, losses have been minimal and operating results have been very favorable with combined ratios less than 100% in each of the last three years.

Capitalization of The R.V.I. Group is strong, especially when taking into consideration the company's significant unearned premium reserve (UPR) balance, a portion of which Fitch includes when measuring The R.V.I. Group's true capital position. The large UPR liability results from the fact that policies have an average term of about nine years, with the entire premium paid at policy inception in most cases, but earned into income over the life of the policy with no portion of the premium refundable even if coverage ceases.

However, The R.V.I. Group does have high concentration risk in that the top five clients accounted for about 50% of gross written premiums in 2001, down from 60% in 2000. This risk is somewhat mitigated by the fact that most key relationships are long-standing and the number of clients has been increasing in the recent past. In addition, the clients that make up the top five in any given year may vary, although three of the top five clients were the same in 2000 and 2001.

The R.V.I. Group also has some capital concentration in that $50.7 million (43%) of total stockholders' equity of $116.7 million at Dec. 31, 2001 is in the form of a promissory non-interest bearing demand note from Continental Casualty Company (CCC), a wholly owned subsidiary of CNA. This capital contribution was made as part of CNA's purchase of 50% of The R.V.I. Group in 1997.

Entity/Issue/Type/Action/Rating/Outlook

R.V.I. Guaranty Co., Ltd.

--Insurer financial strength Affirmed 'A+'/Stable.

R.V.I. America Insurance Co.

--Insurer financial strength Affirmed 'A+'/Stable.