A.M. Best Downgrades Rating for Medical Assurance of W. Va.

December 29, 2003

A.M. Best Co. has downgraded the financial strength rating to B (Fair) from A- (Excellent) of Medical Assurance of West Virginia, Inc., (Charleston, WV) a wholly-owned subsidiary of Medical Assurance Company Inc. (MAI), which, in turn, is a wholly-owned subsidiary of ProAssurance Corporation (PRA) (both located in Delaware). The rating outlook for Medical Assurance of West Virginia is negative. The financial strength rating of A- (Excellent) and stable outlook for the remaining members of the ProAssurance Group are unaffected.

This rating action follows ProAssurance’s Dec. 19, 2003, announcement that it will terminate an existing quota share reinsurance agreement with Medical Assurance of West Virginia, effective Jan. 1, 2004. Due to the cancellation of this reinsurance agreement, Medical Assurance of West Virginia is no longer qualified under A.M. Best’s group rating methodology to be rated as a member of the ProAssurance Group, is now viewed as a non-strategic entity of the group and is rated on a stand-alone basis.

The rating reflects the company’s marginal prospective capital adequacy, uncertain reinsurance strategy and modest operating performance. Although the company is one of the leading writers of medical malpractice coverage in West Virginia, its results are highly susceptible to localized market dynamics such as rising loss costs and any potential variations within the regulatory or competitive environment.

Additionally, with no excess reinsurance in place, after Jan. 1, 2004, Medical Assurance of West Virginia is expected to retain aggregate limits of $1 million, which represents approximately 10 percent of the company’s projected statutory surplus.

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