A.M. Best Downgrades Rating of The American Road Insurance Company: Revises Outlook to Negative

OLDWICK, N.J.--May 1, 20050, 2005--A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of The American Road Insurance Company (TARIC) (Dearborn, MI). The rating outlook has been revised to negative from stable.

A.M. Best is concerned with the operations and profitability of TARIC's ultimate parent, Ford Motor Company, and its potential impact on the operations of TARIC.

In addition, the rating reflects a moderate amount of credit risk assumed by TARIC with placement of reinsurance to an offshore affiliate. Although TARIC's ceded leverage is well above that of its peers, nearly all of its ceded reserves are backed by an onshore trust account with TARIC named as the sole beneficiary.

The rating recognizes TARIC's excellent capitalization level, history of positive operating performance, conservative reserve practices and effective management of exposures. Over the past five years, return on surplus has averaged 19.3%, while capital and surplus levels have grown at a compound rate of 47.0% through the accumulation of net profits, which is reflective of management's focused operating strategy, disciplined underwriting, efficient operating structure and a steady stream of investment income.

Through the affiliation with Ford, TARIC benefits from the extensive penetration of the Ford dealerships, brand name recognition of its immediate parent, Ford Credit, its widespread marketing network and direct sales support.

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