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DBR RELEASES CONFIDENTIAL DRAFT REPORT TO BEACON MUTUAL

DBR RELEASES CONFIDENTIAL DRAFT REPORT TO BEACON MUTUAL

PROVIDENCE - Department of Business Regulation (“DBR”) Director A. Michael Marques said today that it transmitted to the Beacon Mutual Insurance Company its Market Conduct Report in draft form on February 19, 2007.

DBR has been reviewing Beacon's practices and procedures since it began its Market Conduct Exam on September 5, 2005. It intensified the exam by retaining forensic auditors, Deloitte Financial Advisory Services in February, 2006, following receipt of an internal report prepared for the Company’s Board of Directors. The DBR received all necessary information in early May, 2006.

This draft Market Conduct Report was submitted to Beacon for its review for any possible factual errors. If any errors exist, Beacon has an opportunity to present them to DBR no later than March 1, 2007. DBR will then provide Beacon with a final version of the Report, after which the Board of Beacon will have 30 days to respond to DBR's findings. DBR will then review Beacon's response, and the Director will formally accept or reject the Report.

During this process, from the date of the delivery of the draft until the final Report is adopted by the Director, the Report must remain private and confidential, as mandated by Rhode Island General Laws (27-13.1-5(e)). Beacon then has the right to wait 30 days before a public release of the Report. Accordingly, it is expected that the Report will not be released to the public for at least 60 days.

"This process will minimize disruption for both parties and will ensure the fair conclusion to what has admittedly been a costly and time-consuming process," Marques said.

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