A.M. Best Comments on Ratings of 21st Century Insurance Group; Following AIG's Proposed Acquisition of its Outstanding Shares

Business Wire, Jan 26, 2007

OLDWICK, N.J. -- A.M. Best Co. has commented that the financial strength ratings (FSR) of A (Superior) and the issuer credit ratings (ICR) of "aa-" of 21st Century Insurance Group (Woodland Hills, CA) and its affiliates, along with the ICR of "a-" of the group's holding company, 21st Century Insurance Group (21st Century) (Woodland Hills, CA) [NYSE:TW], remain unchanged following American International Group, Inc.'s (AIG) (New York, NY) [NYSE:AIG] announcement of its intention to acquire the outstanding 38.1% publicly held shares of 21st Century. While completion of the proposed transaction would make 21st Century a wholly owned subsidiary of AIG, the offer has no impact on the FSRs and ICRs of 21st Century, as these ratings already incorporate the implicit support provided by AIG's current 61.9% ownership.

In addition to the implicit support provided by AIG, the FSRs and ICRs of 21st Century reflect its strong brand name recognition, direct response marketing approach, emphasis on customer satisfaction and advanced use of technology. As a result, 21st Century maintains a competitive expense advantage and an exceptional level of customer persistency relative to its peers. 21st Century has implemented numerous strategic initiatives to improve earnings, which included the run-off of its homeowner line of business, private passenger automobile rate adjustments, stricter underwriting guidelines and the implementation of a multi-tier pricing model outside of California. Furthermore, 21st Century has implemented a geographic expansion strategy, which has increased the percentage of the U.S. private passenger automobile market it operates in from approximately 18% in 2003 to 60% at the end of 2006. These initiatives, in conjunction with the diminished impact of the reopened 1994 Northridge earthquake claims and favorable automobile claims frequency trends, have resulted in a significant improvement in operating results in recent years.

The FSRs and ICRs also recognize 21st Century's financial flexibility, which is reflective of its moderate financial leverage and access to capital markets.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.> Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.