NJM, with its emphasis on controlling costs, prudent investment decisions and conservative setting of reserves, is well situated to accommodate policyholders' needs now and for many years to come.

• A.M. Best Company, the nation's premier insurance rating service, provides analysis of the financial health of insurance companies. New Jersey Manufacturers Insurance Company and New Jersey Re-Insurance Company saw their ratings of A++ (Superior) reiterated late in 2007.
  
  
• This is A.M. Best's highest rating, bestowed upon only 1.5% of rated insurers nationally. New Jersey Casualty Insurance Company and New Jersey Indemnity Insurance Company earned ratings of A (Excellent), which is outstanding considering these subsidiaries handle only assigned risk business.
  
  
• Underwriting expenses, which represent all costs of doing business except paying claims, were $170.5 million in 2007, or 11.6% of earned premiums earned. This ratio was consistent with the 2006 level of 11.3% and continued to compare quite favorably with an industry average rate of 25% to 26%.
  
  
• NJM Insurance Group's total bond portfolio stood at $4,914.0 million at December 31, 2007. This marks an increase of $149.5 million or 3.1%. Investment income was $222.9 million, an increase of $16.8 million or 8.1%. Although financial markets experienced a significant amount of turmoil later in 2007, the Group's portfolio had a solid year.
  
  
• Investments are selected based on their long-term ability to support business operations, with maturity dates timed to coincide with anticipated future claims payments. Our fixed-income portfolio is of the highest quality, with more than 99% of holdings rated "A" or better.
  
  
• The Group also maintains a carefully selected group of equities that reached a value of $407.7 million, an increase of $71.2 million or 21.2%. Stocks are chosen for their enduring value, not speculative purposes.
  
  
• The ultimate source of an insurer's financial strength is its surplus for the protection of policyholders. The NJM Insurance Group has always maintained a healthy surplus, which is enhanced each year to provide a solid foundation for long-term security well into the future.
  
  
• This provides excellent peace of mind for policyholders. Even if a catastrophic hurricane struck New Jersey, with a force so severe that its expected frequency was only once every 500 years, the Group's surplus would ensure NJM remains on solid footing.