S&P Lowers GuideOne Insurance Group Rtgs to 'BBBpi'

NEW YORK--()--May 14, 2003--Standard & Poor's Ratings Services said today that it lowered its counterparty credit and financial strength ratings on the members of the GuideOne Insurance Group to 'BBBpi' from 'Api' because of poor operating performance at the property/casualty operations.

Standard & Poor's also said that it assigned its 'BBBpi' counterparty credit and financial strength ratings to Millennium Insurance Co. (Millennium) and GuideOne Property & Casualty Insurance Co.

In addition, Standard & Poor's withdrew its 'Api' counterparty credit and financial strength ratings on GuideOne Life Insurance Co. (GuideOne Life) because the company is in the process of being sold to an unaffiliated insurer, Kansas City Life Insurance Co. ('A+' counterparty credit and financial strength ratings).

Standard & Poor's also withdrew its 'BBBpi' counterparty credit and financial strength ratings on Personal Service Insurance Co. because the company was sold to an unaffiliated insurer, American Independent Insurance Co.

"The group's 2002 and 2001 operating performance, excluding life operations, is considered poor," said Standard & Poor's credit analyst Allison MacCullough. In 2002, the property/casualty operations had a net loss of $4.5 million compared with a net loss of $48.2 million in 2001. "This poor performance in recent years is largely because of significant underwriting losses on the property/casualty business," MacCullough added.

In 2002, the group experienced significant adverse loss development, primarily in its homeowners, commercial auto, workers' compensation, and commercial multi-peril lines. The group's capitalization remains strong despite the poor operating performance.

GuideOne Insurance Group is led by GuideOne Mutual Insurance Co. (GuideOne Mutual) and GuideOne Specialty Mutual Insurance Co. (GuideOne Specialty), and all of the property/casualty companies--with the exception of Millennium--participate in an intercompany pooling agreement. Millennium cedes 90% of business to GuideOne Specialty, which cedes it to the pool. The group primarily writes commercial multi-peril, private passenger auto, and auto physical damage insurance through its property/casualty companies and various life and annuity products through GuideOne Life. The group markets its products primarily through independent agents.

Complete ratings information is available to subscribers of RatingsDirect, Standard & Poor's Web-based credit analysis system, at www.ratingsdirect.com. All ratings affected by this rating action can be found on Standard & Poor's public Web site at www.standardandpoors.com; under Fixed Income in the left navigation bar, select Credit Ratings Actions.

Contacts

Standard & Poor's
Allison MacCullough, New York (1) 212-438-7493
Tom Taillon, New York (1) 212-438-7213

Contacts

Standard & Poor's
Allison MacCullough, New York (1) 212-438-7493
Tom Taillon, New York (1) 212-438-7213