A.M. Best Places Ratings of Federated National Insurance Company and American Vehicle Insurance Company Under Review

Business Wire, August 19, 2004

OLDWICK, N.J. -- A.M. Best Co. has placed the financial strength rating of B (Fair) of Federated National Insurance Company and the rating of B (Very Good) of American Vehicle Insurance Company (both of Plantation, FL) under review with negative implications.

These rating actions reflect the combination of anticipated significant net capital losses as a result of Hurricane Charley, as well as considerable premium growth in recent years. Although Federated National does carry catastrophe reinsurance protection that will mitigate the overall impact, a significant decline in surplus is expected. While American Vehicle--the sister company of Federated National--does not write any direct property exposure in Florida, it maintained a $2 million catastrophe retention on the behalf of Federated National and will also be impacted. In addition, A.M. Best remains concerned with significant premium growth, particularly over the first half of 2004, and the correspondingly elevated catastrophic exposure in the hurricane-prone Florida market.

Historically, the parent company, 21st Century Holding Company, has provided ongoing financial support to the statutory entities. A.M. Best anticipates the need for significant additional capital support over the near term. While the parent has access to capital, execution risk exists. In the absence of capital improvement, the ratings would likely be downgraded. The ratings will remain under review pending execution of the companies' capital raising initiatives and further discussions with management.

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 www.ambest.com.