A.M. Best Places Ratings of ProAssurance Group Under Review

A.M. Best Places Ratings of ProAssurance Group Under Review

    Business Editors

    OLDWICK, N.J.--(BUSINESS WIRE)--March 4, 2005--A.M. Best Co. has placed the financial strength rating of A- (Excellent) of ProAssurance Group (ProAssurance) (Birmingham, AL) under review with negative implications following the February 28, 2005, announcement that it has entered into an agreement that provides for NCRIC Group (Washington, DC) to be merged into ProAssurance through an all stock transaction. Concurrently, A.M. Best has placed the debt rating of "bbb-" assigned to ProAssurance Corporation's (PRA) (NYSE: PRA) $100 million, 20-year senior unsecured convertible debentures and the issuer credit rating of "bbb-" under review with negative implications. The negative implications signal that the ratings could either remain the same or be downgraded following the completion of the under review process.
    The proposed transaction is valued at $69.6 million and values NCRIC at $10.10 per share based on the closing price of PRA's common stock on February 28, 2005. Should the transaction be completed, NCRIC Group is expected to be positioned as a sister company to PRA's main insurance subsidiaries within the organization.
    A.M. Best believes that there is uncertainty related to the prospective operating performance and capitalization of the newly formed entity largely due to the adverse loss reserve development experienced by NCRIC Group. Although ProAssurance has reported strong operating results in the past two years and has demonstrated success in its past experiences of acquiring companies, the group's risk-adjusted capitalization is at the lower end of an acceptable level for its current rating. A.M. Best believes that any required capital infusions into NCRIC could have adverse effects on the consolidated group's capitalization. However, A.M. Best recognizes ProAssurance's ability to acquire additional capital in the public markets and the potential for capital growth through earnings prior to closing. This rating action is based on the current capital structure of ProAssurance and is subject to change based on the outcome of meetings that A.M. Best will conduct with ProAssurance's management prior to the close of the transaction. A.M. Best will fully review the newly integrated entity's operating plan, the 2004 loss reserve analysis of each statutory operating unit and ProAssurance's capital position at the time of close. The transaction is expected to close during the third quarter of 2005 and still requires regulatory and NCRIC shareholder approval.
    The financial strength rating of A- (Excellent) has been placed under review with negative implications for ProAssurance Group and its following subsidiaries:

--	Medical Assurance Company, Inc.
--	ProNational Insurance Company
--	Red Mountain Casualty Insurance Company, Inc.

    The following debt rating has been placed under review with negative implications:

    ProAssurance Corporation--
    -- "bbb-" on senior unsecured convertible debentures

    The following indicative ratings have been placed under review with negative implications for securities available under the existing shelf registration:

    ProAssurance Corporation--
    -- "bb" on preferred stock
    -- "bbb-" on senior unsecured notes
    -- "bb+" on subordinated notes

    The issuer credit rating of "bbb-" of ProAssurance Corporation has been placed under review with negative implications.
    For Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.
    For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies, groups and industry composites, please visit http://www.ambest.com/pc.
    A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.

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CONTACT: A.M. Best Co. Public Relations: Jim Peavy, 908-439-2200, ext. 5644 james.peavy@ambest.com or Rachelle Striegel, 908-439-2200, ext. 5378 rachelle.striegel@ambest.com or Analysts: Devin Inskeep, 908-439-2200, ext. 5449 devin.inskeep@ambest.com or Joseph Roethel, 908-439-2200, ext. 5630 joseph.roethel@ambest.com

KEYWORD: NEW JERSEY INDUSTRY KEYWORD: INSURANCE SOURCE: A.M. Best Co.

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