A.M. Best Affirms Ratings of Intact Insurance Group

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and issuer credit ratings (ICR) of "aa-” of Intact Insurance Group (the Group) and its members. The Group includes Belair Insurance Company Inc. (Montreal, Quebec), Intact Insurance Company, Novex Insurance Company, The Nordic Insurance Company of Canada and Trafalgar Insurance Company of Canada.

Additionally, A.M. Best has affirmed the ICR of "a-” as well as the debt ratings of "a-” on CAD 250 million, Series 1, 5.41% senior unsecured medium-term notes due September 3, 2019; "a-” on CAD 250 million, Series 2, 6.40% senior unsecured medium-term notes due November 23, 2039; and "a-” on senior unsecured debt securities, "bbb+” on subordinated unsecured debt securities and "bbb” on Class A preferred shares included in the CAD 2 billion Preliminary Short Form Base Shelf Prospectus issued May 13, 2009 of the Group’s holding company, Intact Financial Corporation (IFC) [TSX:IFC]. The outlook for all ratings is stable. All companies are domiciled in Toronto, Ontario, unless otherwise specified. IFC is the former ING Canada Inc.

The ratings are reflective of the Group’s superior capitalization, strong historical earnings and dominant business profile as the largest non-government property/casualty insurer in Canada.

In addition, the Group benefits from advantages over its competitors in investment and claims management, as well as pricing and risk selection due to its experienced management team, superior size, geographic and product line diversification, multi-channel distribution network and sound catastrophe management.

The ratings also take into consideration the moderate debt leverage of IFC and its added financial flexibility to raise capital through either debt or equity offerings to pursue acquisitions or for general corporate purposes.

Partially offsetting these strengths are the challenges the Group faces from rapidly rising automobile personal accident benefits claims in Ontario; soft commercial lines pricing; weather-related property claims due to a trend of more frequent and severe storm activity; low interest rates and volatile equities markets. In addition, mandatory product reforms to auto insurance in Ontario, which go into affect in September 2010, have raised concerns over pricing, reserving and the overall impact these changes will have on future earnings. These concerns are partially mitigated by the actions of management to improve profitability and reduce risk through increased risk segmentation, higher premium rates, strong internal management over investments and claims and the market knowledge and experience of localized management teams working within a unified structure.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.