Conning Research: Surety Industry Turnaround Continues: Positive Forecast for Growth and Profitability

-- Premium to grow in line with GDP at least

(Hartford, CT) March 26, 2007 - The surety segment can now be said to have fully recovered from its slump, according to a new study by Conning Research and Consulting, Inc.

"The surety market slump began in 2001, coinciding with the recession and resulting financial turmoil," said Mark Jablonowski, analyst at Conning Research & Consulting. "The combined ratio climbed more than 40 points and stayed there for the next three years. While the recession and tightening credit resulted in skyrocketing losses, the property-casualty underwriting cycle also contributed to the problem."

The Conning Research study, "The Surety Market: Taking Care of Business" is Conning's first analysis of the surety segment, which has impact well beyond its size due to its importance to sectors of the economy relating to construction and regulatory compliance.

"The huge increase in losses during the 2001-2003 period were due not just to claims reported, but also to claims developing badly and recoveries and other claims mitigation efforts falling off," said Stephan Christiansen, director of research at Conning Research & Consulting. "Yet this turned around in 2004 and 2005, and 2006 shows continued improvement. Capacity is returning to the market, but with a renewed appreciation for underwriting discipline. That new-found discipline, along with attention to automation and technology driving cost control, lead us to a positive forecast for the surety line over the next few years, with premium growing at least as fast as GDP."

"The Surety Market: Taking Care of Business" is available for purchase from Conning Research & Consulting, Inc., by calling (888) 707-1177 or by visiting the company's web site at www.conningresearch.com.

About Conning Research & Consulting, Inc.
Conning Research & Consulting provides insurance industry analysis to insurers and industry stakeholders. The Conning name has represented excellence in independent insurance industry research for 50 years. As a result of its wealth of experience and intimate knowledge of the insurance industry, Conning understands industry challenges and opportunities and provides in-depth insights and analyses on a wide range of industry products and issues. Conning is headquartered in Hartford, CT.