PROS Procentury Corp (MM)

A.M. Best Co. has affirmed the financial strength ratings of A- (Excellent) and the issuer credit ratings (ICR) of �a-� of Century Insurance Group (Century) (Westerville, OH) and its members. A.M. Best also has affirmed the ICR of �bbb-� of Century�s publicly traded ultimate parent company, ProCentury Corporation (ProCentury) (Westerville, OH) (NASDAQ: PROS). The outlook for the ratings is stable. (See below for a detailed listing of the companies and ratings.) Concurrently, A.M. Best has taken into consideration ProCentury�s announced merger with Meadowbrook Insurance Group, Inc. (Meadowbrook) (Southfield, MI) (NYSE: MIG), and A.M. Best believes the ratings of Century will remain unchanged following the consummation of the definitive merger agreement. The transaction is expected to close in third quarter 2008. At the close of the transaction, the ICR of ProCentury likely will be withdrawn, as the company is expected to be removed from NASDAQ and delisted. Subsequent to the planned merger, the chairman and chief executive officer of Century, Ed Feighan, will vacate his current position. Aside from Mr. Feighan�s departure, the majority of ProCentury�s executive management team is expected to remain in tact. Based on discussions with management, there are presently no plans to reorganize ProCentury and, as such, A.M. Best sees no change to the company operationally or strategically. Along with the pending transaction, these rating affirmations also take into account ProCentury�s fourth quarter financial results, the continuation of its improved operating profitability and the group�s ability to sustain solid profit margins despite an increasingly competitive market environment over the past couple of years. Additionally, the ratings recognize Century�s adequate capitalization and liquidity along with the financial flexibility afforded it by being part of a publicly traded company. Underwriting results continue to improve, indicative of Century�s focus on growing its core book of diversified small to medium-sized surplus lines business. These positive rating factors are partially offset by Century�s elevated underwriting leverage, marginal five-year average operating returns and challenges associated with the ongoing emergence of construction defect claims. The most recent reserve development, however, has been more favorable, indicating that the considerable efforts taken to fortify the reserve base are manifesting in the enhanced results. Century is a niche insurance organization focused on offering specialty insurance products designed to meet the specific insurance needs of targeted insurance groups. The insureds are comprised of small to medium-sized surplus lines businesses. Century�s efforts are concentrated on those businesses it considers underserved by the standard market. Last week ProCentury issued a press release announcing the execution of the definitive merger agreement with Meadowbrook in a deal valued at approximately $272.6 million in cash and stock to be paid to ProCentury�s shareholders. Under the proposed transaction, the combined entity will adopt and operate under the Meadowbrook name and will continue to trade on the NYSE under the ticker symbol MIG. Robert S. Cubbin, Meadowbrook�s chief executive officer, will continue in his current role for the post merger combined entity, while two ProCentury board members will join Meadowbrook�s Board of Directors. Under the terms of the merger agreement, shareholders of ProCentury will be entitled to receive either $20.00 in cash or Meadowbrook common stock having the same value, subject to a specific stipulation. This stipulation is that each ProCentury shareholder will have the option to elect to receive cash or Meadowbrook common stock, subject to prorating, so that the maximum in total cash consideration will not exceed 45% of the total consideration paid. This transaction is subject to shareholder and regulatory approvals. The FSR of A- (Excellent) and ICRs of �a-� have been affirmed for Century Insurance Group and its following members: Century Surety Company ProCentury Insurance Company The ICR of �bbb-� has been affirmed for ProCentury Corporation. 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.