Fitch Downgrades Ratings of Farmers Group Subsidiaries Acquired from AIG; Outlook Negative

Fitch Ratings announced today that it has downgraded to 'A+' from 'AA-' the insurer financial strength (IFS) ratings of the group of personal lines insurers (see full rating list below) acquired by Farmers Group Inc. (FGI) from American International Group, Inc. (AIG) and subsequently transferred from FGI to the Farmers Exchanges (Farmers). Fitch has also downgraded to 'BBB+' from 'A-' the $100 million of senior unsecured notes issued by 21st Century Group that were also transferred to the farmers Exchanges from FGI. Fitch has removed all of these ratings from Rating Watch Negative and assigned a Negative Rating Outlook.

Fitch's ratings actions follow AIG's announcement that it has closed on the sale of the personal lines insurers to FGI, a subsidiary of Zurich Financial Services (ZFS), in a transaction that was announced on April 16, 2009. Fitch placed the ratings on Negative Watch at that time and said that the companies' ratings would likely be downgraded to a level more commensurate with ZFS' ratings upon the transaction's close. Fitch's current rating on ZFS' insurance subsidiary is 'A+' and the Rating Outlook is Negative.

Shortly after the transaction between AIG and FGI closed, ownership of AIG's Personal Auto Group was transferred from FGI to Farmers. FGI serves as the attorney-in-fact and provides fee-based management services for Farmers.

Fitch believes the ratings of the personal lines companies benefit from Farmers' relationship with ZFS given the management agreement between FGI and Farmers, the significant levels of reinsurance between ZFS subsidiaries and Farmers, and investments made by ZFS subsidiaries in surplus notes issued by Farmers. Fitch also notes positively that FGI provides Farmers with a $250 million liquidity facility. Because the ratings of the personal lines companies are grouped with Fitch's ratings for ZFS, the Negative Outlook for these entities reflects capital pressures throughout the ZFS organization and challenges in rebuilding capital in the current financial environment.

Fitch has downgraded the IFS ratings for the following entities to 'A+' from 'AA-' and removed them from Rating Watch Negative:

--21st Century Casualty Company;

--21st Century Insurance Company;

--21st Century Insurance Company of the Southwest;

--AIG Advantage Insurance Company (formerly Minnesota Ins. Co.);

--AIG Auto Insurance Company of New Jersey;

--AIG Centennial Insurance Company;

--AIG Hawaii Insurance Company, Inc.;

--AIG Indemnity Insurance Company;

--AIG National Insurance Company, Inc.;

--AIG Preferred Insurance Company;

--AIG Premier Insurance Company;

--American International Insurance Company;

--American International Insurance Company of California, Inc.;

--American International Insurance Company of Delaware;

--American International Insurance Company of New Jersey;

--American International Pacific Insurance Company;

--American Pacific Insurance Company, Inc.;

--New Hampshire Indemnity Company, Inc.

The Outlook for the IFS ratings is Negative.

Fitch has also downgraded the following ratings:

21st Century Insurance Group

--Long-term Issuer Default Rating (IDR) to 'A-' from 'A';

--$100 million senior unsecured notes due Dec. 15, 2013 to 'BBB+' from 'A'.

Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.

Contacts:

Fitch Ratings
David Stephenson, [phone] (London)
Tim Ockenga, [phone] (Frankfurt)
Greg Dickerson, [phone] (New York)
Jim Auden, [phone] (Chicago)
Brian Bertsch, [phone]
(Media Relations, New York)
[e-mail]