A.M. Best Downgrades AMERCO Subsidiaries

May 22, 2003

A.M. Best Co. has downgraded the financial strength ratings to C (Weak) from B (Fair) of Republic Western Insurance Company (Arizona) and North American Fire & Casualty Insurance Company (Louisiana).

The companies are subsidiaries of AMERCO (Reno, Nev.), which is the parent of U-Haul International, Inc. (Phoenix). The companies had a financial strength rating of B (Fair) and were under review with negative implications largely based on the financial distress of AMERCO.

The downgrade of Republic Western takes into consideration the significant accounting adjustments reported in the first quarter of 2003, their consequential impact on Republic Western’s capitalization and the continued financial challenges surrounding its parent, AMERCO. These factors stem from Republic Western’s first quarter accounting charges of approximately $96 million, continued adverse loss reserve development and its adverse impact on policyholders’surplus which Best currently views as vulnerable.

Accounting charges taken in the first quarter were spread across various assets held by Republic Western, but were primarily related to the non-admission of receivable balances due from its parent partially caused by the parent’s non-investment grade status. As a result, Republic Western’s surplus fell 58 percent from $166 million to roughly $70 million at the end of the first quarter 2003. In the quarter, Republic Western also reported approximately $8.5 million of unfavorable loss reserve development.

Over the past several years, Republic Western has become increasingly dependent on its parent for capital support. However, given its current status, AMERCO’s ability to support its insurance subsidiaries is practically non-existent.

Furthermore, Republic Western consented to a supervision order by the Arizona Department of Insurance on May 20, 2003, in light of the above circumstances. The order is intended to circumscribe and closely monitor the situation while Republic Western and its affiliates engage in self-corrective efforts. The negative outlook arises from concerns over the aforementioned factors.

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