A.M. Best Assigns Rating to Hawaiian Insurance and Guaranty Company, Limited

Business Wire, Sept 26, 2006

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of B (Fair) to Hawaiian Insurance and Guaranty Company, Limited (HIG) (Honolulu, HI). The outlook for the rating is stable.

HIG is a Hawaiian-based insurance company, which has recently assumed the Hawaiian book of business from its namesake, The Hawaiian Insurance & Guaranty Company Limited, a subsidiary of the Vesta Insurance Group (Alabama), which is under regulatory supervision of the Hawaii Department of Insurance (DOI). HIG acquired rights to the Hawaiian policy obligations and the related unearned premium reserves, as well as rights to the name and trademarks from the Hawaii DOI. The book of business includes: property, property catastrophe, personal auto and short-tail casualty through an agency base. HIG has been capitalized with $12 million in common equity from its parent company, GNW Acquisition Corp.

The rating reflects HIG's adequate risk-adjusted capitalization whichCoon a pro forma basis and after considering various stress test scenariosCoinitially supports the rating and improves over a five-year time period. However, the company is highly susceptible to low frequency high severity events, which affect the Hawaiian Islands.

HIG benefits from the operational support it will receive from its sister affiliate, Great Northwest Insurance Company (GNIC) (St. Paul, MN). GNIC will provide the policy management systems, processing platforms and management expertise for HIG. HIG benefits further from its retention of the prior company's experienced claims and underwriting staffs, as well as the existing agency base; all of whom are familiar with the historically profitable book of business.

The ability of HIG to effectively retain market acceptance will only be proven over time. Accordingly, A.M. Best will closely monitor the quarterly performance of the company against its stated operating plan and any material deviations in terms of management, earnings, capitalization or risk profile could result in downward pressure on the rating.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.> For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies and A.M. Best groups, please visit www.ambest.com/pc.> 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.