Press Release - NOVEMBER 02, 2005

A.M. Best Assigns Ratings to GeoVera Insurance Group


CONTACTS:
 Analyst(s)
Jeffrey Mango, CPA
(908) 439-2200, ext. 5204
jeffrey.mango@ambest.com

Richard Attanasio
(908) 439-2200, ext. 5432
richard.attanasio@ambest.com
Public Relations
Jim Peavy
(908) 439-2200, ext. 5644
james.peavy@ambest.com

Rachelle Striegel
(908) 439-2200, ext. 5378
rachelle.striegel@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK, N.J. - NOVEMBER 02, 2005
A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" to the GeoVera Insurance Group and its members. The group consists of the following four operating entities: GeoVera Insurance Company, USF&G Specialty Insurance Company (both domiciled in Hunt Valley, MD), Pacific Select Property Insurance Company (Fairfield, CA) and GeoVera Re, Ltd. (Bermuda). The three U.S. domiciled entities were previously assigned an FSR of A+ (Superior) and an ICR of "aa-" as a result of their prior affiliation through inter-company reinsurance agreements with St. Paul Travelers Insurance Companies (St. Paul, MN). However, the companies were placed under review with negative implications on August 9, 2005, following the announcement by The St. Paul Travelers Companies, Inc. (St. Paul MN) regarding the signing of a definitive agreement to sell the three entities to a group of outside investors. The outlook on all ratings is stable.

The newly formed GeoVera Insurance Group will focus on underwriting catastrophe exposed residential property risks, primarily in California, Florida and Texas. An inter-company pooling agreement is in place among the three U.S. based entities, with fifty percent of the pooled results being assumed by GeoVera Re, Ltd., through a quota-share reinsurance agreement. The ratings reflect the favorable capitalization which has resulted from the acquisition and management's experience in its market segment.

The group's existing management team, which has historically produced profitable results for the entities under the previous St. Paul organization, will continue to lead the business under the new ownership structure. The favorable capital position, combined with management's conservative expansion of its business is anticipated to continue to yield moderate leverage measures.

Although the group will concentrate all underwriting on providing coverage in catastrophe prone areas, it will combine an established catastrophe modeled web-based quoting/binding system to ensure proper pricing, with an extensive catastrophe reinsurance program to mitigate its exposure. Historically, this has resulted in favorable underwriting performance, which is anticipated to continue. However, the group is also challenged with operating as a distinct entity separate from St. Paul. This may result in certain execution risk regarding infrastructure pressures, both on an operational and financial basis.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.

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