Fitch Affirms ‘BBB-‘ IFS Rating for Sierra Insurance Group; Withdraws Rating

Following the announcement of the completion of the sale of Sierra Insurance Group (SIG) by Sierra Health Services, Inc. (SIE) to Folksamerica Holdings Company Inc., Fitch has affirmed SIG’s insurer financial strength (IFS)rating of ‘BBB-‘ and simultaneously withdraws the rating due to lack of user interest.

Members of SIG include the following operating companies: California Indemnity Insurance Company, Commercial Casualty Insurance Company, Sierra Insurance Company of Texas and CII Insurance Company.

SIG’s ratings reflect Fitch’s view that Folksamerica Holdings has purchased SIG based on financial rather than strategic considerations, and will manage SIG as a runoff operation. Though Fitch believes SIG likely has sufficient capital to support a successful runoff, Fitch believes it is likely reserves will develop adversely over time based on experience over the last several years, and that capital levels in the future will decline. Further, Fitch would not look for Folksamerica to contribute capital in the future to support the runoff.

Folksamerica Holdings is a wholly owned subsidiary of White Mountains Insurance Group Ltd. (White Mountains), an insurance holding company based in Bermuda with consolidated GAAP assets of $15.0 billion and stockholders’ equity of $3.0 billion at December 31, 2003.

All ratings of White Mountains and Folksamerica, including Folksamerica Reinsurance Company’s IFS rating of ‘A’ are unchanged.