SEAB Seabright (MM)

A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of �a-� of SeaBright Insurance Company (SBIC) (Chicago, IL). Concurrently, A.M. Best has affirmed the ICR of �bbb-� of SBIC�s holding company, SeaBright Insurance Holdings, Inc. (SIH) (Delaware) [NASDAQ: SEAB]. The outlook for all ratings is stable. The ratings reflect SBIC�s solid capitalization achieved through contributions from SIH, in addition to retained earnings from profitable operations in recent years, its niche market focus as a specialty provider of multi-jurisdictional workers� compensation insurance and experienced management team. These strengths are partially offset by operational and marketplace challenges associated with the successful execution of its business plans and management�s growth plans, which could strain overall capitalization should profit targets not be achieved given continued soft market conditions. Despite these concerns, the outlook reflects the financial commitment of SIH, which infused significant levels of capital during SBIC�s initial growth phase, as well as the strong operating performance SBIC has achieved through increasingly profitable underwriting results in recent years. SBIC�s capitalization recognizes the proceeds of both an initial and follow-on public offering of its parent, SIH. SIH raised net proceeds of approximately $80.8 million, of which $74.8 million was contributed to SBIC in January 2005. The follow-on offering raised approximately $57.6 million, of which $50.0 million was contributed to SBIC in February 2006. The ratings also contemplate management�s strategic business plans and projections for near-term earnings and capital accumulation. A.M. Best monitors SBIC�s progress in achieving its business plan to ensure that premium growth and accumulation of loss reserves do not strain its risk-adjusted capitalization and that overall operating results are achieved in accordance with rating expectations. Additionally, A.M. Best anticipates that SIH will support planned premium growth with additional capital contributions as necessary, allowing SBIC to maintain a level of risk-adjusted capitalization that remains supportive of its ratings. For Best�s Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. 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.