RUTX Republic Companies

A.M. Best Co. has placed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Republic Companies Group (Republic) (Dallas, TX) and its property/casualty insurance operating companies under review with developing implications. A.M. Best has also placed the ICR of "bbb-" for Republic's parent, Republic Companies Group, Inc. (NASDAQ: RUTX) (Dallas, TX), under review with developing implications. (See below for a detailed list of the ratings.) These rating actions follow the announcement that Republic's parent has entered into a definitive merger agreement with a subsidiary of Delek Capital Ltd. (Delek Capital). Delek Capital is a subsidiary of Delek Group Ltd., a conglomerate domiciled and publicly-traded in Israel with interests in energy, infrastructure, communications, real estate, financial services, insurance and automotive businesses. A.M. Best anticipates minimal near-term impact operationally to Republic as existing senior management will continue in their current capacity. However, additional due diligence regarding the long-term strategic implications of this transaction, potential growth initiatives, the impact on Republic's statutory capital and the ultimate capital structure of its new intermediate parent is required. A.M. Best plans to meet with Republic's and Delek Capital's management in the near term and will conduct additional due diligence regarding this transaction. The ratings will remain under review pending the close of the transaction, which is expected in fourth quarter 2006 pending regulatory and shareholder approvals, as well as A.M. Best's meeting with management. The FSR of A- (Excellent) and ICRs of "a-" have been placed under review with developing implications for the Republic Companies Group and its following property/casualty affiliates: -- Republic Fire & Casualty Insurance Company -- Republic Lloyds -- Republic Underwriters Insurance Company -- Republic-Vanguard Insurance Company -- Southern County Mutual Insurance Company -- Southern Insurance Company -- Southern Underwriters Insurance Company -- Southern Vanguard Insurance Company The ICR of "bbb-" has been placed under review with developing implications for Republic Companies Group, Inc. For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 3,000 individual property/casualty companies and A.M. Best groups, please visit www.ambest.com/pc. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.