A.M. Best Co. has commented that the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Tower Group Companies (New York) and its pooled members, the FSR of A- (Excellent) and ICR of “a-” of CastlePoint Reinsurance Company, Limited (Bermuda) (all with a stable outlook) and the FSR of B++ (Good) and ICR of “bbb+” (both with a positive outlook) of Kodiak Insurance Company (West Trenton, NJ) are unchanged.

Additionally, A.M. Best has commented that the ICR of “bbb-” (with a stable outlook) of the publicly traded holding company, Tower Group, Inc. (Tower) (headquartered in New York) (NASDAQ:TWGP), also is unchanged following the announcement that Tower has entered into a definitive agreement to purchase Specialty Underwriters’ Alliance, Inc. (SUAI) (NASDAQ:SUAI) in an all-stock transaction valued at approximately $107 million.

Under the terms of the agreement, SUAI shareholders would receive Tower common stock equal to $6.72 per SUAI share based on Friday, June 19, 2009’s closing stock price of $24.00 for Tower. The transaction is expected to close in December 2009 subject to customary closing conditions, including the approval by SUAI shareholders and regulatory approvals.

Tower believes the acquisition enhances its business profile in the specialty business segment, an area that Tower sees as a very strong opportunity for growth. Also, by leveraging the operating platform and distribution relationships that SUAI has developed, Tower is confident in its ability to further build on CastlePoint Insurance Company’s (New York NY) specialty business.

Tower, through its subsidiaries, offers a broad range of specialized property/casualty insurance products and services to primarily small and mid-sized business and individuals in the North East, Florida, Texas and California. The company has expanded its operations through the acquisition of companies and existing books of business during the most recent five-year period. Although this acquisition will broaden Tower’s distribution network and geographic spread, A.M. Best believes that the performance of SUAI’s relatively new book of commercial lines business combined with Tower’s new business, particularly California workers’ compensation risks, will take time to evaluate the actual performance as loss reserves develop.

For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

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.

A.M. Best Co.
Analysts
Duncan McColl, 908-439-2200, ext. 5826
duncan.mccoll@ambest.com
or
Joseph Roethel, 908-439-2200, ext. 5630
joseph.roethel@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com