A.M. Best Places The Proformance Insurance Co. Under Review with Negative Implications

December 14, 2004

A.M. Best Co. has placed the financial strength rating of B (Fair) of The Proformance Insurance Company (Proformance) (Freehold, N.J.) under review with negative implications.

This action reflects the deterioration of Proformance’s risk-adjusted capitalization through the first nine months of 2004 to below a level supportive of its rating.

The deterioration was driven by $9.6 million in adverse loss reserve development that resulted in a decline in surplus.

The company’s parent, National Atlantic Holdings Corporation, is projecting the completion of an initial public offering for January 2005, with a portion of the proceeds expected to be contributed to Proformance. Successful execution of the public offering and the subsequent capital contribution to Proformance would result in risk-adjusted capitalization supportive of its current rating.

However, failure to successfully execute the public offering and subsequent capital contribution to Proformance would likely result in a downgrade of its rating.

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