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A. M. BEST AFFIRMS CRUM AND FORSTER INSURANCE COMPANIES' RATING

 OLDWICK, N.J., Jan. 18 /PRNewswire/ -- Effective immediately, A. M. Best's "A-" (Excellent) pooled rating of the Crum and Forster insurance companies has been affirmed and removed from "under review" status. The rating was placed under review with negative short-term implications on Oct. 29, 1992 due to the uncertainties surrounding the group's announced restructuring and the degree of parental capital support.
 Affirmation of Crum and Forster's rating follows a series of meetings held with management over the past several months focusing on a major restructuring of the group under its new Chairman and CEO, Joseph W. Brown. A.M. Best is now sufficiently satisfied that the most material aspects of the Crum and Forster reorganization have been addressed, including Best's requirement for additional capital support. Best's review has culminated with the group's ultimate parent company, Xerox Corporation, announcement today that it intends to "disengage" from its financial service businesses (including the Crum and Forster insurance unit) as well as its intention to provide additional capital support of up to $700 million to Crum and Forster.
 The $700 million of potential additional capital support is comprised of approximately $300 million of a contributed term note and approximately $400 million stop-loss reinsurance protection for adverse loss reserve development and uncollectible reinsurance recoverables on both on-going and discontinued operations. This new capital and substantial third-quarter capital gains of over $400 million will offset restructuring charges of approximately $800 million and maintain the group's 1992 year-end surplus at $1.5 billion.
 "A.M. Best views Crum and Forster's restructuring plan, balance sheet strengthening, and Xerox's capital support as having long-term positive impacts. These actions will enhance the group's profitability, reduce the volatility of its underlying loss reserves, as well as enable the group to operate at more prudent leverage than before the restructuring," said John H. Snyder, senior vice president of Best's Property/Casualty Division.
 While the realignment of the operating units has been implemented, Crum and Forster is still working with state insurance regulators to complete the legal restructuring necessary to break up Crum and Forster's main ueparate legal entity to handle the run off of very unprofitable discontinued books of business, which generated the majority of the aforementioned restructuring charges. Furthermore, the new legal entity will be owned separately by Xerox and will have no future impact on Crum and Forster. Management expects that this legal restructuring, subject to regulatory approval will be completed later this year. At that time, A.M. Best will reevaluate the financial strength of each of these separate legal entities in assigning appropriate Best's Ratings.
 This rating review applies to five inter-company pool members, led by United States Fire Insurance Company, and 14 affiliates that either reinsure with the pool or receive the rating of a parent that is a pool member.
 -0- 1/18/93
 /CONTACT: Christina Stein of A.M. Best public relations, 908-439-2200/


CO: Crum and Forster ST: IN: INS SU: RTG

LD -- NY068 -- 6030 01/18/93 17:16 EST
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Publication:PR Newswire
Date:Jan 18, 1993
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