S&P Lowers First Indemnity of America Ins. Co. FSR

Business Wire, April 11, 2000

     Business Editors

       NEW YORK--(BUSINESS WIRE)--Standard & Poor's CreditWire--
April 11, 2000--Standard & Poor's today lowered its financial strength
rating on First Indemnity of America Insurance Co. (First Indemnity)
to single-'Bpi' from double-'Bpi'.
       First Indemnity, which markets primarily through brokers,
commenced operations in 1979. It is a stock company based in
Parsippany, N.J., and licensed in seven states. With $5.8 million in
surplus in 1998, it is a very small insurer, whose major lines of
business are surety and inland marine insurance.
     [pilcrow (paragraph sign)]    The rating on the company is based on
stand-alone
characteristics.

     Major Rating Factors:

       -- At year-end 1998, capitalization was marginal, as indicated by
Standard & Poor's capital adequacy ratio of 85.3%. The company's
surplus, which was $5.8 million at year-end 1998, has declined at an
annual rate of 8.6% since 1991. In addition, for the first nine months
of 1999, surplus decreased 12% to $5.1 million, primarily as a result
of a $0.6 million net underwriting loss and $0.6 million of net
realized capital losses.
       -- Operating performance has been weak, with a five-year average
return on revenue of negative 4.0%. In addition, the Standard & Poor's
earnings adequacy ratio of negative 103.0% is considered weak.
       -- The company's liquidity ratio of 33.4%, in conjunction with a
reinsurance recoverable from non-affiliates to surplus of 77.3%, is
viewed as a limiting factor.
       -- The company's limited business scope (79.2% of net premiums
written in New Jersey), in combination with the company's history of
erratic earnings, is viewed as unfavorable.
       'pi' ratings, denoted with a 'pi' subscript, are insurer
financial strength ratings based on an analysis of an insurer's
published financial information and additional information in the
public domain. They do not reflect in-depth meetings with an insurer's
management and are therefore based on less comprehensive information
than ratings without a 'pi' subscript. 'pi' ratings are reviewed
annually based on a new year's financial statements, but may be
reviewed on an interim basis if a major event that may affect the
insurer's financial security occurs. Ratings with a 'pi' subscript are
not subject to potential CreditWatch listings.
       Ratings with a 'pi' subscript generally are not modified with
'plus' or 'minus' designations. However, such designations may be
assigned when the insurer's financial strength rating is constrained
by sovereign risk or the credit quality of a parent company or
affiliated group, Standard & Poor's said. -- CreditWire.

     --30--RGB/dx* SAM/dx

     CONTACT: Standard & Poor's Ratings Services, New York
              Polina Chernyak, 212/438-7179

     KEYWORD: NEW YORK NEW JERSEY
     INDUSTRY KEYWORD: BANKING INSURANCE BOND/STOCK RATINGS