A.M. Best Affirms Ratings of Mutual Savings Life Insurance Company and Mutual Savings Fire and Removes Ratings From Under Review

Business Wire, May 9, 2006

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of B- (Fair) of Mutual Savings Life Insurance Company (Mutual Savings) and the FSR of C (Marginal) of its subsidiary, Mutual Savings Fire Insurance Company (Mutual Savings Fire) (both of Decatur, AL). Both ratings have been removed from under review and assigned a negative outlook. The ratings were placed under review on September 15, 2005, pending assessment of the effects of Hurricane Katrina on Mutual Savings Fire.

Due to losses at Mutual Savings Fire resulting from Hurricane Katrina, Mutual Savings contributed $2.4 million to Mutual Savings Fire in 2005. No additional capital contributions are expected to be required. While Mutual Savings Fire's losses indirectly resulted in a decline in capital for Mutual Savings, its immediate parent, Primesco Inc., forgave a $7 million surplus note on Mutual Savings' balance sheet, improving the life subsidiary's quality of capital. It should also be noted that Mutual Savings has reported operating gains in each of the past four years. A.M. Best expects earnings to continue to contribute to surplus expansion going forward.

In order for Mutual Savings to maintain its current rating, it will need to organically improve its absolute and risk-adjusted capital levels. The refinancing of Primesco Inc.'s debt in 2005 and the reduction in the amount of required dividends from Mutual Savings to service the debt for the near term, should assist Mutual Savings in its efforts to rebuild its surplus position.

The negative outlook on Mutual Savings Fire is based on its risk-adjusted capitalization, which includes its significant and ongoing exposure to catastrophic property losses. This exposure is evident by the company's surplus decline in 2005 and 2004 as a result of losses from hurricanes Katrina and Ivan, respectively. The rating recognizes the explicit financial support provided by Mutual Savings and the specific $2.4 million capital contribution made to Mutual Savings Fire in 2005. In addition, Mutual Savings Fire's single state concentration continues to expose its operating performance and level of surplus to regulatory actions.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.> 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.