RTW, Inc. Reports New Quota Share Reinsurance Agreement and A.M. Best Rating Action; A.M. Best Affirms the B+ Financial Strength Rating of RTW Insurance Subsidiary

Business Wire, June 25, 2001

Business Editors

MINNEAPOLIS--(BUSINESS WIRE)--June 25, 2001

RTW, Inc. (Nasdaq:RTWI) reported today that it has entered into a new quota share agreement effective January 1, 2001 and that A.M. Best Co. (Best) has affirmed the B (Very Good) financial strength rating of American Compensation Insurance Company (ACIC), a subsidiary of RTW, Inc., and removed ACIC from "under review" status.

Jeffrey B. Murphy, the Company's Chief Financial Officer stated, "We have been working closely with Best to understand its leverage models and successfully implemented the quota share reinsurance program to reduce our leverage ratios. We are pleased that Best has affirmed the B financial strength rating of our insurance subsidiary, ACIC, and removed it from under review. "

According to Best, "The rating action reflects management's successful implementation of a substantial quota share reinsurance agreement, effective January 1, 2001, which alleviated the Company's elevated leverage position. With the quota share agreement in place and strict underwriting controls, the Company effectively reduced its net premium. This premium reduction, combined with an increase in policyholder surplus in 2001, has improved the Company's underwriting leverage considerably."

Mr. Murphy said, "We have recently completed negotiation of a 50% quota share reinsurance treaty effective January 1, 2001. In addition to reducing net premiums, this treaty will also substantially reduce our net claim and claim settlement expenses and policy acquisition costs for 2001, most substantially in the second quarter when we will recognize the effect of the transaction for the first and second quarters of 2001.

RTW, Inc., based in Minneapolis, Minnesota, manages disability products and services for employers. Primary among its disability products and services is a workers' compensation management system designed to lower employers' costs and return injured employees to work as soon as possible.

RTW, Inc. combines its proprietary management systems, the ID 15(R) and the RTW SOLUTION(R), with insurance products underwritten by an RTW subsidiary, American Compensation Insurance Company. RTW offers its services to employers in Minnesota, Wisconsin, South Dakota, Colorado, Missouri, Illinois, Kansas, Michigan, Indiana, Massachusetts, Connecticut, Rhode Island and New Hampshire. Clients span many industries including manufacturing, health care, hospitality, and wholesale/retail. RTW, Inc. is traded on the Nasdaq National Market under the symbol RTWI.

Safe Harbor Statement: Some of the statements made in this News Release, as well as statements made by the Company in periodic press releases, oral statements made by the Company's officials to analysts and shareholders in the course of presentations about the Company and conference calls following earnings releases, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such factors include, among other things, (i) the Company's ability to accurately predict claims development; (ii) general economic and business conditions; (iii) interest rate changes; (iv) competition and the regulatory environment in which the Company operates; (v) claims frequency; (vi) claims severity; (vii) the Company's ability to manage both its existing claims and new claims in an effective manner; (viii) the number of new and renewal policy applications submitted by the Company's agents; and (ix) other factors as noted in the Company's filings with the SEC. This discussion of uncertainties is by no means exhaustive but is designed to highlight important factors that may impact the Company's future performance.