S&P Affirms Texas Municipal League Intergovernmental Pool Ratings

June 11, 2003

Standard & Poor’s has affirmed its ‘A’ counterparty credit and financial strength ratings on the members of the Texas Municipal League Intergovernmental Risk Pool (TML-IRP) based the organization’s continued strong presence in the Texas local government market, significant pricing advantage, negligible competitive pressure, high retention of plan members, and extremely strong capitalization. The outlook is stable.

Partially offsetting these positive factors is the organization’s weak prior fiscal year operating performance (in the workers’ compensation and property funds), limited prospective growth opportunities, and market concentration in Texas that could potentially expose the company to legislative risks.

“Capitalization is expected to remain at extremely strong levels and a sensible reinsurance program and investment portfolio to be maintained,” said Standard & Poor’s credit analyst Tom Thun. “In addition, underwriting performance at fiscal year-end 2003 is expected to improve and produce the ratio of loss and loss adjustment expenses to net contributions of less than 75 percent and in line with historical performance.”

TML-IRP maintains a proven platform as the primary provider of self-insured coverage to the Texas local government market. Providing coverage to more than 2,300 members, the organization is firmly established within its market as demonstrated by its extremely strong year-over-year retention of members through both hard and soft market cycles.

In particular, the current hard pricing market has benefited TML-IRP by increasing membership levels by 9 percent and membership contribution by 14 percent.

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