STANDARD & POOR'S FINANCIAL SERVICES LLC

STANDARD & POOR'S FINANCIAL SERVICES LLC ("S&PZZ-L") - S&P: Article Looks At Medical Malpractice Insurers' Prospects - For 2010

Medical malpractice insurance writers apparently achieved better operating results in 2008 and through the first nine months of 2009 than Standard & Poor's Ratings Services had anticipated two years ago because of larger-than-expected favorable reserve development. Nevertheless, Standard & Poor's said in an article published today that it believes the market will continue to soften in 2010 as prices decline at a more moderate pace. The article, which is titled "In 2010, Medical Malpractice Insurers Are Seeking Profits In A Soft Market," says that even without the ups and downs of the pricing cycle, medical malpractice insurers face significant challenges, including volatile losses, the long-tail nature of the reserves and exposures, and the potential for adverse legal verdicts. We have only seen a handful of insurers sustain profitability throughout pricing cycles, and they have generally been the larger, more diversified insurers in a highly fragmented industry.

We expect many medical malpractice monoline companies to ultimately report a stable or improved combined ratio for 2009, mainly because of reserve releases, a trend we expect will continue through 2010 and mitigate the expected decline in prices. Certain insurers will likely outperform the medical malpractice market, with combined ratios of less than 90% in 2009 and 2010 based on superior underwriting controls, continued (but slower) reserve releases, and their ability to diversify geographically

We'll continue to monitor how these different components play out in the coming year. The mix of operating expenses and investment income will clearly influence the prospects of the malpractice insurers in the near term. But in this soft market, we will increasingly focus on prices, loss-cost trends, and reserve releases and their potential impacts to earnings and capital for medical malpractice insurers.

The report is available to RatingsDirect on the Global Credit Portal subscribers at www.globalcreditportal.com and RatingsDirect subscribers at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-7280 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor's public Web site by using the Ratings search box located in the left column at www.standardandpoors.com. Members of the media may request a copy of this report by contacting the media representative provided. Media Contact: Jeff Sexton, New York, (1) 212-438-3448 jeff_sexton@standardandpoors.com Analyst Contacts: Neil Stein, New York (1) 212-438-5906 Shanshan Yang, New York (1) 212-438-3773 Damien Magarelli, New York (1) 212-438-6975 Key Contacts: Americas Media Relations: (1) 212-438-6667 media_ relations@standardandpoors.com Americas Customer Service: (1) 212-438-7280 research_request@standardandpoors.com

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