A.M. Best Downgrades Safeway Property Rating

August 18, 2004

A.M. Best Co. has downgraded the financial strength rating to B (Fair) from B++ (Very Good) of Safeway Property Insurance Company (Gainesville, Fla.). The outlook is negative.

The rating downgrade recognizes the company’s reduced capitalization as a result of its ultimate net exposure from Hurricane Charley. As a result of expected losses, Safeway Property’s capitalization declined by approximately 25 percent. In addition, A.M. Best remains concerned with the company’s significant premium growth in recent years and the elevated catastrophe exposure in the hurricane-prone Florida market.

While operating performance has historically been favorable, the rating outlook is negative based on the company’s fair capitalization and the continued high gross catastrophe exposure.

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