S&P’s Affirms Infinity P/C Corp., Sub Ratings; Outlook Negative

March 19, 2003

Standard & Poor’s has affirmed its ‘BBB’ counterparty credit rating on
personal lines writer Infinity Property and Casualty Corp. (Infinity) based on Infinity’s and Infinity’s subsidiaries’ strong market position as the third largest nonstandard automobile writer in the U.S., extremely strong pro forma capital adequacy at the operating level, significantly improved operating performance, conservative investment strategy, and relatively low financial leverage at the holding-company level.

Partially offsetting these factors is the group’s narrow scope of operations as primarily a nonstandard auto writer and Infinity’s relatively short operating history as a public entity following its recent spin-off from former parent, American Financial Group Inc.

Standard & Poor’s also said that it affirmed its ‘A’ counterparty credit
and financial strength ratings on Infinity’s insurance subsidiaries. The
outlook on all these companies is negative.

“The outlook reflects Infinity’s moderately diminished financial flexibility at the holding-company level and higher reliance on reinsurance following its decision to withdraw its $180 million senior note offering,” said Standard & Poor’s credit analyst Laline Carvalho.

Infinity plans to maintain an existing quota-share reinsurance arrangement on its physical damage business and establish a line of credit in the second quarter of 2003, which is expected to enable the group’s operating subsidiaries to maintain prudent levels of capital over the next couple of years.

However, Standard & Poor’s believes both of these arrangements are less permanent sources of capital compared with Infinity’s previously intended debt issuance.

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