AM Best


A.M. Best Places Rating of First Nonprofit Insurance Company Under Review With Positive Implications


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Analyst(s)

Brian O'Larte

(908) 439-2200, ext. 5138

brian.olarte@ambest.com

Gerard Altonji

(908) 439-2200, ext. 5626

gerard.altonji@ambest.com


Public Relations

Jim Peavy

(908) 439-2200, ext. 5644

james.peavy@ambest.com

Rachelle Morrow

(908) 439-2200, ext. 5378

rachelle.morrow@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK, N.J. - JULY 12, 2007 12:00 AM (EDT)
A.M. Best Co. has placed the financial strength rating (FSR) of B++ (Good) of First Nonprofit Insurance Company (First Nonprofit) (Chicago, IL) under review with positive implications.

This rating action follows the announcement that the Board of Directors of First Nonprofit Mutual Holding Company (First Nonprofit Mutual), the immediate parent of First Nonprofit and Mutual Insurers Holding Company (Mutual Insurers) have agreed to a merger of the two holding companies. Mutual Insurers is the direct parent of Milwaukee Insurance Company (MIC) (Milwaukee, WI), and MIC is an affiliate of Unitrin Inc. (Unitrin) (Chicago, IL) [NYSE: UTR].

Upon completion of the transaction, First Nonprofit Mutual will be merged into Mutual Insurers with MIC becoming a wholly owned subsidiary of First Nonprofit. All direct business written by MIC (exclusive of previously assumed First Nonprofit business) will be 100% reinsured by Trinity Universal Insurance Company (Trinity) (Dallas, TX), a Unitrin affiliate. Additionally, at the close of the transaction, all Unitrin representation on Mutual Insurers' Board of Directors will end, thus severing MIC's affiliation with Unitrin. Furthermore, all First Nonprofit business previously ceded to MIC and then to Trinity has been returned to First Nonprofit via commutation, effective January 1, 2007.

In A.M. Best's opinion, this merger would significantly improve First Nonprofit's capitalization and business profile, allowing the insurer to retain a significantly greater proportion of its historically profitable book of insurance for non-profit organizations. As a result of the proposed merger, First Nonprofit is also expected to benefit from significant improvement in the quality of its capital as its previous dependence on surplus relief reinsurance will be eliminated.

The rating will remain under review pending A.M. Best's examination of the transaction and First Nonprofit's risk-adjusted capital position upon completion of the merger. The transaction is expected to be completed in third quarter 2007, subject to regulatory and member approvals.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center.

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.

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