A.M. Best Downgrades Rating for NIPPONKOA Insurance Co. of America; Outlook is Stable

May 20, 2004

A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of NIPPONKOA Insurance Company of America (NKA). The outlook is stable.

The downgrade reflects A.M. Best’s opinion that NKA is no longer core to its parent company, NIPPONKOA Insurance Company, Limited (NKJ) (Japan), and NKJ’s decision to suspend NKA’s underwriting activities for two years, through March 31, 2006.

Offsetting factors are the company’s strong capital position and NKJ’s commitment to retain 100 percent of NKA’s capital during this two-year period. A.M. Best will reevaluate NKA’s rating status again after all remaining policies have been transferred to NKJ’s U.S. branch (NKB), currently expected to be January 2005.

NKA’s direct writings will be transferred to NKB to increase efficiencies. NKA, as the Assistant U.S. Manager, will continue to service claims and provide various underwriting functions to NKB. NKA has maintained excellent risk-adjusted capitalization since its domestication in 2001 through good historical returns and the retention of earnings.

The company has agreed not to remove surplus during this two-year period, and it is therefore expected that NKA will maintain excellent capitalization as existing financial obligations are satisfied.

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