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A.M. Best Downgrades Issuer Credit Rating of National Fire and Indemnity Exchange

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A.M. Best has downgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to "bbb" from "bbb+" and affirmed the Financial Strength
Rating (FSR) of B++ (Good) of National Fire and Indemnity Exchange
(NFIE) (St. Louis, MO). The outlook of the Long-Term ICR has been
revised to stable from negative, while the outlook of the FSR remains
stable.

The Credit Ratings (ratings) reflect NFIE's balance sheet strength,
which A.M. Best categorizes as very strong, as well as its marginal
operating performance, limited business profile and appropriate
enterprise risk management.

The rating actions also reflect NFIE's volatility in operating
performance, driven primarily by adverse underwriting performance.
Underwriting results have been impacted negatively by lack of real
premium growth, elevated underwriting expenses and exposure to
weather-related catastrophe loss events, especially in its two largest
states, Florida and Texas. As a result, the company's five-year average
pre-tax and total returns on revenue and equity are favorable but lag
the commercial property composite. In addition, the company's five-year
average combined and operating ratios also compare unfavorably with the
composite. However, absent weather-related losses, NFIE's underlying
book of business is performing well, as its five-year average pure loss
ratio compares favorably with its composite average.

This press release relates to Credit Ratings that have been published
on A.M. Best's website. For all rating information relating to the
release and pertinent disclosures, including details of the office
responsible for issuing each of the individual ratings referenced in
this release, please see A.M. Best's
Recent
Rating Activity
web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view
Understanding
Best's Credit Ratings
. For information on the proper media
use of Best's Credit Ratings and A.M. Best press releases, please view
Guide
for Media - Proper Use of Best's Credit Ratings and A.M. Best Rating
Action Press Releases
.

A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit
www.ambest.com
for more information
.

Copyright © 2018 by A.M. Best Rating Services, Inc. and/or its
affiliates. ALL RIGHTS RESERVED.

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