A . M. BEST RATING

Seneca Insurance Group, Seneca Insurance Company and Seneca Specialty Insurance Company are rated “A“ (Excellent) VIII by A. M. Best Company. In their June 25, 2008 report, a full copy of which is available upon request, A. M. Best Company explains their rating as follows:

Rating Rationale: The rating applies to Seneca Insurance Company and its reinsured subsidiary, Seneca Specialty Insurance Company. This rating reflects the group's strong and sustained underwriting and operating performance that has exceeded the industry by a wide margin and superior capital position. Somewhat offsetting the positive rating factors is the general market softening throughout the commercial lines sector which is expected to lead to higher accident year loss ratios.

The positive rating factors are derived from the group's diverse product offering and management's emphasis on underwriting process and control, ability to react to changing market conditions, and creation of profitable new business opportunities. The group has delivered loss ratios significantly lower than those of the industry and combined ratios of 100% or less since 1995. Underwriting results have been notable for the overall absence of adverse loss development. Additionally, Seneca's results have not benefited from stop loss or financial reinsurance. Although Seneca maintains an expense structure several points higher than other package and property writers, it is mitigated by the group's excellent historical loss experience.

Reserve Quality: Seneca recognized approximately $21 million of reserve redundancy in 2007 which contributed to reduce the 99.0% accident year combined ratio combined ratio to a 75.9% calendar year combined ratio. The redundancies were particularly notable in commercial multi-peril and the property lines of business and were predominantly from the 2006 and 2005 accident years although there were redundancies in all prior years. In 2006, Seneca recognized $5.7 million of reserve redundancy which also contributed to an excellent reported calendar year combined ratio of 85.7% although caused operating profits to be lower than in 2005 which were the highest in Seneca's history. The reserve redundancies are attributable to Seneca's consistently conservative reserving practices and emphasis on business lines with short tails.