A.M. Best Affirms Main Street America Group’s ‘A’ Rating

January 25, 2007

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) of Main Street America Group (MSAG) and its four members led by NGM Insurance Co. and including affiliated insurers Main Street America Assurance Co., MSA Insurance Co. (South Carolina) and Old Dominion Insurance Co. The rating outlook is stable.

A.M. Best said that the rating affirmation reflects Jacsonville, Fla.-based MSAG’s “excellent risk-adjusted capitalization, favorable operating performance, diversified product offerings and established regional presence along the East Coast.”

The rating also considers the financial flexibility afforded MSAG by its mutual holding company structure, which includes a 95.1 percent equity ownership in Main Street America Group, Inc. (MSAGI), an intermediate holding company, which owns 100 percent of the equity in NGM and the other affiliates, according to the rating agency.

A.M. Best noted that MSAG is susceptible to weather-related losses due to its geographic concentration in the Northeast and coastal exposure from Maine to Florida. However, the exposures in these areas are managed through “an extensive risk mitigation strategy and comprehensive reinsurance program.”

The rating considered the group’s debt leverage following MSAG’s restructuring of White Mountains Insurance Group’s (White Mountains in Bermuda) 50 percent equity interest in Main Street America Holdings, Inc. (MSAH), a downstream holding company. During 2006, MSAH paid a $70 million cash dividend to White Mountains and MSAGI issued $70 million of 9 percent non-voting, cumulative perpetual preferred stock and 4.9 percent of its common stock in exchange for 100 percent of White Mountains’ common stock in MSAH.

Source: A.M. Best

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