S&P Assigns Mercury Indemnity Co. of Ill. `BBBpi' Rtg

5 August 1999

S&P Assigns Mercury Indemnity Co. of Ill. `BBBpi' Rtg

NEW YORK--Standard & Poor's--Aug. 4, 1999--Standard & Poor's today assigned its triple `Bpi' financial strength rating to Mercury Indemnity Co. of Illinois.
The company is licensed only in Illinois and commenced operations in 1992. Its major line of business is preferred private passenger automobile insurance. The Vernon Hill, Ill.-based company is a member of the Mercury General Group, the largest independent agency automobile carrier in California.



     Major rating factors include:

--   Standard & Poor's believes that the company is a strategically
     important member of the Mercury General Group, and therefore
     group support is a factor in the rating.

--   Capitalization is extremely strong as indicated by Standard &
     Poor's capital adequacy ratio of more than 300%.

--   Return on assets has displayed volatility over the past five
     years, as indicated by a risk-adjusted return on assets of
     negative 6.5%.

    Geographic and business line concentration is a rating factor.
    `Pi' ratings, denoted with a pi subscript, are insurer financial strength ratings based on an analysis of an insurer's published financial information and additional information in the public domain. They do not reflect in-depth meetings with an insurer's management and are therefore based on less comprehensive information than ratings without a pi subscript. Pi ratings are reviewed annually based on a new year's financial statements, but may be reviewed on an interim basis if a major event that may affect the insurer's financial security occurs. Ratings with a pi subscript are not subject to potential CreditWatch listings.
    Ratings with a pi subscript generally are not modified with `plus' or `minus' designations. However, such designations may be assigned when the insurer's financial strength rating is constrained by sovereign risk or the credit quality of a parent company or affiliated group, Standard & Poor's said.---CreditWire