Best Places Rating for Atlantic Preferred Under Review

December 28, 2004

A.M. Best Co. has placed the B+ (Very Good) rating of Atlantic Preferred Insurance Company (Tampa, Fla.), under review with negative implications.

This action reflects the decline in surplus recorded in the third quarter of 2004 due to significant catastrophe activity and the deteriorated risk-adjusted capitalization of its affiliate, Southern Family Insurance Company.

Accordingly, A.M. Best believes the overall financial flexibility of the organization has been negatively impacted. Management is currently pursuing a number of strategic initiatives to stabilize risk- adjusted capitalization. The final rating outcomes will depend on the success of these initiatives. In the absence of improved risk-adjusted capitalization, the ratings would likely be downgraded.

The ratings will remain under review pending improvement in the company’s capitalization, further discussions with management as well as an in-depth analysis of its strategic plan.

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