A.M. Best Places FSR for Amerisafe Under Review

June 24, 2005

A.M. Best Co. has placed the financial strength ratings of A- (Excellent) of Amerisafe Insurance Group (Amerisafe) (DeRidder, Louisiana) under review with negative implications. Amerisafe consists of American Interstate Insurance Company and its wholly owned subsidiaries, Silver Oak Casualty, Inc. and American Interstate Insurance Company of Texas, which participate in a pooling agreement.

Amerisafe’s A- rating reflects the group’s favorable operating results, as measured by its five-year average returns on revenue and surplus and solid position within its niche workers’ compensation markets.

However, A.M. Best is concerned by the decline in Amerisafe’s risk-adjusted capitalization, which is impacted by its above average underwriting leverage and elevated credit risk associated with reinsurance recoverables, and the somewhat limited financial flexibility of the parent holding company, AMERISAFE Inc.

A.M. Best believes management needs to address the group’s capitalization to retain the current rating. If successful, the group’s rating will likely be affirmed.

However, if management cannot successfully improve the group’s capitalization without further leveraging the parent holding company, the group’s rating may be downgraded. A.M. Best expects the under review status to be resolved in the fourth quarter of 2005.

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