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A.M. BEST PLACES RATINGS OF CITATION INSURANCE GROUP, PICO SUBSIDIARIES UNDER REVIEW WITH DEVELOPING IMPLICATIONS

OLDWICK, N.J., March 7 /PRNewswire/ -- Effective immediately, A.M. Best Company has placed the "B-" (Adequate) Best's Rating of Citation Insurance Company and the "C" (Marginal) Best's Rating of Citation National Insurance Company, both wholly owned subsidiaries of Citation Insurance Group (Citation) under review with developing implications.

In addition, the "B++" (Very Good) Best's Rating of Sequoia Insurance Company and the "B+" (Very Good) Best's Rating of American Physicians Life Insurance Company (APL), wholly owned subsidiaries of Physicians Insurance Company of Ohio (PICO), were placed under review with developing implications.

This rating action follows the announcement that Citation and PICO signed a letter of intent for a stock-for-stock merger under which PICO would become a wholly owned subsidiary of Citation. Under the terms of the letter of intent, each of PICO's outstanding shares (about 5.2 million) will be converted into between five and six shares of Citation common stock based upon a floating exchange rate. As a result of the transaction, PICO shareholders are expected to own between 80% and 83% of the combined company and the remaining shares will be owned by existing Citation shareholders.

The ratings of Citation Insurance, Citation National Insurance and Sequoia will remain under review pending the outcome of the transaction and Best's detailed evaluation of each company's future business plan. The review will emphasize the companies' operating strategies, expected financial results and management's ability to successfully implement their business plans.

Additionally, Sequoia's rating review will focus on its potential increased underwriting leverage and the redeployment of PICO's surplus. Also, A.M. Best will analyze the anticipated expense reductions as the result of Sequoia's integration with Citation Insurance Company.

APL's rating will remain under review pending further details regarding the announced merger and additional management discussions on the potential impact of the sale on the company.

The "NA-4" Best's classification of PICO and its subsidiary, Professionals Insurance Company, are not affected by this rating action. The transaction is subject to approval by both groups' shareholders, boards of directors and regulators. It is expected to be completed late in the third quarter of 1996.

A.M. Best Company, established in 1899, is American's oldest and most widely known insurance rating and information source.
 -0- 3/7/96


/CONTACT: Rick Hansen of A.M. Best Company, 908-439-2200 ext. 5618/

CO: Citation Insurance Company; Citation National Insurance Company;

Citation Insurance Group ST: New Jersey IN: INS SU: RTG

PL -- NYTH091 -- 1285 03/07/96 16:09 EST
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Publication:PR Newswire
Date:Mar 7, 1996
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