United Fire Group on CreditWatch

S&P placed its “A+” counterparty credit and financial strength ratings on the members of United Fire Group and United Life Insurance Co. on CreditWatch with negative implications after the year-end 2001 review indicated that the group’s capitalization and earnings adequacy are below the levels appropriate for the ratings.

S&P also assigned its “A+” counterparty credit and financial strength ratings to United Fire & Indemnity Co. and United Fire Lloyd’s and placed these ratings on CreditWatch negative. These companies are now considered part of the United Fire Group.

An S&P analyst said the group’s earning profile has improved in recent years, but the earnings level is still lower than the rating level. He added that a convertible preferred stock offering being prepared by the group “should increase its capital adequacy and allow it to take advantage of the hardening market.”

The resolution of the CreditWatch will depend on the success of the capital-raising initiative. If completed, it is expected to result in net proceeds of $52 million.