A.M. Best Affirms and Assigns Ratings to Professionals Direct Insurance Company

Business Wire, June 5, 2007

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and assigned an issuer credit rating (ICR) of "a-" to Professionals Direct Insurance Company (PDIC) (Grand Rapids, MI). A.M. Best has also assigned an ICR of "bbb-" to PDIC's parent holding company, Professionals Direct, Inc. (Grand Rapids, MI) [OTCBB: PFLD]. The outlook for all ratings is stable.

These ratings reflect PDIC's supportive capitalization, geographical spread of risk and satisfactory operating performance. As a result of PDIC's geographic expansion in 2002 and 2003, the company is now active in 32 states, thereby reducing its dependence on Michigan, which now accounts for approximately one-third of direct premiums written.

The ratings also reflect Professionals Direct, Inc.'s financial leverage (total debt/total capital), which has improved from approximately 40% in 2005 to 33% as of March 31, 2007. Professionals Direct, Inc.'s interest coverage is also within bounds, with debt servicing being funded by companies within the organization other than PDIC.

Offsetting these positive rating factors are PDIC's product concentration, historical volatility in operating results and adverse loss reserve development since 2004, resulting from a substantial increase in bulk reserves.

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.