AFC Allied Capital Corporation

A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of the publicly-traded holding company Allmerica Financial Corporation's (Allmerica) (NYSE: AFC) (Worcester, MA) property/casualty subsidiaries. Concurrently, A.M. Best has affirmed Allmerica's ICR of "bbb-" and debt ratings of "bbb-" for its senior debt and "bb" for capital securities. All ratings have been assigned a stable outlook. These rating actions reflect A.M. Best's review of the company's financial position following an assessment of recent losses due to Hurricanes Katrina and Rita. The ratings were placed under review with negative implications on September 15, 2005 due to uncertainty of estimated losses sustained from Hurricane Katrina and its impact on capitalization. Although some uncertainty remains regarding the ultimate loss, A.M. Best is comfortable with Allmerica's estimates and expects the company will maintain risk-adjusted capitalization in line with its ratings. Additionally, A.M. Best anticipates Allmerica will produce favorable operating earnings and believes its underwriting leverage and capitalization will further improve over the intermediate term. Finally, the company maintains adequate reinsurance protection in the event of additional hurricane-related losses during 2005. The FSR of A- (Excellent) and ICRs of "a-" have been removed from under review with negative implications and affirmed with a stable outlook for the following property/casualty subsidiaries of Allmerica Financial Corporation: -- Allmerica Financial Property & Casualty Companies -- Allmerica Financial Alliance Insurance Company -- Allmerica Financial Benefit Insurance Company -- Citizens Insurance Company of America -- Citizens Insurance Company of Ohio -- Citizens Insurance Company of the Midwest -- Citizens Insurance Company of Illinois -- The Hanover American Insurance Company -- The Hanover Insurance Company -- Hanover Lloyd's Insurance Company -- The Hanover New Jersey Insurance Company -- Massachusetts Bay Insurance Company The ICR of "bbb-" for Allmerica Financial Corporation has been removed from under review with negative implications and affirmed with a stable outlook. The following debt ratings have been removed from under review with negative implications and affirmed with a stable outlook: Allmerica Financial Corporation -- "bbb-" on $200 million 7.625% senior debentures, due 2025 AFC Capital Trust -- "bb" on $300 million 8.207% trust preferred securities, due 2027 For Best's Debt Ratings, all other Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. 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.