Medical Protective Company (A.M. Best #: 00591 NAIC #: 11843)

Underwriting results were again impacted by prior year development in 2003, as the company

reported $42 million of additional strengthening primarily for 1999 through 2001 accident years. The company continued to mirror loss trends observed in the medical-malpractice market which has been beset by sharp increases in loss costs, compounded by frequency in recent years.
Notwithstanding, Medical Protective has historically generated strong pre-tax earnings supported by a stable and substantial level of invested asset base. To strengthen its risk-adjusted capitalization, the company has entered into a 25% quota share agreement in 2004 to manage growth. Furthermore, Medical Protective's capitalization is supported by an aggregate stop-loss protection from its affiliate, Employers Reinsurance Corporation, through accident year 2003, which will serve to manage any unforeseen deterioration in the 2001 through 2003 accident years. A.M. Best expects that Medical Protective will build capital organically as it maintains fundamental profitability through underwriting discipline and stable investment returns. Accordingly the outlook is stable.
National Interstate Insurance Company (A.M. Best #: 10829 NAIC #: 32620)

The following text is derived from the report of National Interstate Group.

capitalization and management's expertise in the transportation risk market. These positive rating factors are partially offset by the group's aggressive premium expansion and above average

The following text is derived from the report of McM Group.

The following text is derived from the report of Old Republic Title Insurance Group.

economic cycles. Due to the group's strong capitalization, favorable operating earnings and support from its parent, A.M. Best views the group's rating outlook as stable.

publicly-traded parent, Old Republic International Corporation, which maintains low financial

leverage.
The positive rating factors are partially offset by the risk associated with absorbing significant

premium advances in recent years and the challenges in handling earnings and revenue volatility stemming from the fluctuating dynamics of the real estate market. However, the group's title

premium is nationally diversified, which limits volatility to regional changes in real estate markets. In addition, the majority of the group's title premium is generated from the agency sector that enables the group to manage down cycles as fixed costs are generally lower as compared to competitors with larger allocations of direct business.
Preferred Professional Insurance Company (A.M. Best #: 03699 NAIC #: 36234)

Rating Rationale: This rating reflects Preferred Professional Insurance Company's (PPIC)

adequate risk-adjusted capitalization, good geographic risk and elevated policyholder retention through its high level of customer service to its seventeen owner hospitals and health care

organizations. Partially offsetting these positive rating factors is PPIC's limited operating profitability by design, substantial increase in underwriting exposures and high ceded reinsurance leverage. Management has responded to the recent deterioration in profitability and surge in exposures with improved underwriting controls and rate adjustments in problematic territories. A.M. Best views the rating outlook as stable.
PPIC's primary objective is to support the Catholic Healthcare Ministry of its owners by providing a wide array of insurance products and related services to its shareholders, physicians, and other

affiliated entities. The company does have access to additional capital as PPIC has shareholder agreements in place which require each owner to maintain a maximum net premium written to

surplus ratio of 1.6 times. If this threshold is exceeded, the shareholder agreements require the

affected owner institution(s) to provide a capital infusion into PPIC thereby correcting this out of

balance situation.
PPIC's operating profitability is limited as its primary operating goal is to maintain insurance pricing levels that, after consideration of investment income, provides slightly better than breakeven financial performance measures for the exclusive benefit of its tax-exempt corporate owners. The significant rise in underwriting exposures is a result of the additional market of eligible physicians from new shareholders and the increased number of insured physicians from existing shareholders due to the inability of physicians to obtain professional liability insurance as writers of this line pulled out of areas and/or stopped writing new business.

Providence Washington Insurance Co of NY (A.M. Best #: 03784 NAIC #: 35726)

Providence Washington Insurance Company (A.M. Best #: 02411 NAIC #: 24295)

Providence Washington Insurance Cos (A.M. Best #: 00786)

York Insurance Company (A.M. Best #: 02409 NAIC #: 24325)

The following text is derived from the report of Providence Washington Insurance Companies.

renewal rights transaction with OneBeacon Insurance Company which, upon finalization, would

include the rights to a significant portion of PW's commercial package business. Management has already received approval from the Rhode Island Insurance Department and is in the process of meeting other state regulators over the next few weeks.
This action also takes into consideration the additional reserve charge taken in the first quarter of 2004, the continued decrease in policyholders' surplus and the considerable loss reserve

development reported in recent years. In light of the aforementioned reserve charge and the

potential for further adverse loss reserve development, the rating remains under review pending A.M. Best's meeting with management and a review of Providence Washington's run-off plan.
This rating action follows the rating downgrade in March 2004, the substantial reserve charge

reported by Providence Washington at year-end 2003 and the resulting deterioration in risk-adjusted capitalization. As a consequence, A.M. Best placed the rating under review with negative implications and has been in discussions with management concerning potential capital raising alternatives. At that time, the negative implication signaled the risk associated with the capital raising initiatives and the likelihood of a further downgrade. In the absence of new capital, management determined that an orderly run off would be in the best interest of the company and its policyholders.

capitalization and poor underwriting results driven by significant reserve charges relating primarily to accident years 1999-2001. The group recorded a reserve charge of $43.9 million in the fourth

quarter of 2003 which drove the group's policyholders' surplus down by 35%. Subsequently, there was an additional $11 million of adverse reserve development in the first quarter of 2004.

Providence Washington has reported considerable unfavorable loss reserve development in recent years. Other negative factors include PW's modest earnings history and the payment of stockholder dividends that has hampered internal capital generation. While dividends from Providence Washington are necessary to service the debt at PW Acquisition Company, this is tempered by the fact that the debt held is predominantly long-term and payable in kind.

The following text is derived from the report of Ulico Insurance Group.

operating results and decline in statutory surplus, elevated risk surrounding numerous levels within the entire organization, including the limited financial flexibility of the parent holding company, ULLICO, Inc. as well as credit risk related to reinsurance recoverable amounts from its sister companies, Union Labor Life Insurance Company and Ulico Standard of America Casualty

Company. Partially offsetting these negative rating factors is the group's supportive risk-adjusted capitalization, its satisfactory liquidity position and the initial positive effects of a corporate-wide

restructuring effort begun by a new management team installed in mid-2003. While management

expects improved profitability at the group in the mid-term, A.M. Best views the rating outlook as negative. Until consistent profitability is restored at the group and other affiliated companies of the corporation, capital demands on ULLICO Inc. exist. Given the limited financial flexibility of ULLICO Inc., the group may not be able to rely as heavily as in the past for support from its parent. A.M. Best will look for the group to restore operating profitability and growth in statutory surplus while maintaining a conservative balance sheet.
Although the group's focus is on operations in its core fiduciary and union liability lines of business, operating earnings continue to be weighed down historically by the discontinued traditional workers' compensation, surety and contractors' liability as well as group accident and health lines of business which have generated poor underlying loss ratios and sizeable one-time expenses. More recently, sizeable losses have been generated in its core fiduciary liability and union hall lines and its most recently discontinued ADR workers' compensation and commercial multi-peril lines of business. Much of the operating loss generated in 2003 resulted from new management's adoption of more conservative reserving practices across all lines, with loss reserves being increased by more than $20 million. The sizeable operating losses generated in more recent years has contributed to the 36% drop in surplus over this period, resulting in elevated net and gross leverage measures. The group maintains a conservative investment philosophy with the majority of its assets invested in fixed income securities, including government and corporate bonds, and cash.
The rating is based on the consolidated operating performance and financial condition of Ulico Casualty Company (UCC) and its wholly-owned subsidiary, Ulico Indemnity Company (UIC).
Ulico Indemnity Company (A.M. Best #: 11329 NAIC #: 24319)

Rating Rationale: The rating reflects Ulico Indemnity Company's volatile and overall unfavorable operating earnings and elevated risk surrounding numerous levels within the entire organization,

including the limited financial flexibility of the ultimate parent holding company, ULLICO, Inc., and sister company, Union Labor Life Insurance Company. Partially offsetting these negative rating