Standard & Poor's Rating Services has lowered the rating of Tryggingamiðstöðin hf. and its subsidiary, Nemi Forsikring ASA in Norway, from BBB to BBB-. The companies have been on CreditWatch since June 6. The outlook on both entities is stable This action by Standard and Poor's reflects its concerns over the increasing levels of debt leverage in FL Group, the parent company of Tryggingamiðstöðin hf. In the announcement from Standard & Poor's it is stated; that following discussions with the management of FL Group, S&P has concluded that there is a potential threat to capitalization of TM even though there are regulatory, governance and other mechanism in place to limit that. It is however Standard & Poor's view that standalone credit quality of both TM and Nemi remains unchanged. TM's Board of Directors regrets this result and points out that the capital position of TM and Nemi remains strong and the companies have full potential to continue servicing their customers in the future. For further information contact Óskar B. Hauksson, VP of Finance and Operations, tel: +354 5152000. The announcement from Standard & Poor's: Insurers Tryggingamidstödin hf. And Subsidiary NEMI Forsikring ASA Downgraded To 'BBB-' Primary Credit Analyst: Peter McClean, London, (44) 20-7176-7075; peter_mcclean@standardandpoors.com Secondary Credit Analyst: Rowena Potter, London, (44) 20-7176-7070; rowena_potter@standardandpoors.com Additional Contact: Insurance Ratings Europe; InsuranceInteractive_Europe@standardandpoors. com Rationale On June 26, 2008, Standard & Poor's Ratings Services lowered to 'BBB-' from 'BBB' its long-term counterparty credit and insurer financial strength ratings on Iceland-based insurer Tryggingamidstödin hf. (TM) and its subsidiary, Norway-based non-life insurer NEMI Forsikring ASA. At the same time, the ratings were removed from CreditWatch, where they were placed with negative implications on June 6, 2008. The outlook on both entities is stable. The rating actions reflect our concerns over the levels of debt leverage in the parent company, Iceland-based investment holding company FL Group (not rated). These concerns relate particularly to the potential threat to the capitalization of TM and NEMI derived from the uncertainty regarding FL's ability to service its debt obligations. In our view, this diminishes TM's and NEMI's financial flexibility. Following discussions with FL Group's management, Standard & Poor's has received further clarification regarding FL's intentions toward its investment in TM and NEMI, and regarding FL's ability to draw upon the capital resources of those entities. As a result of these discussions, we have concluded that there is sufficient potential threat to capitalization to justify a downgrade. However, we also believe that there are regulatory, governance, and other mechanisms in place that will limit the extent to which FL is able to access TM's capital, and that consequently the downgrade should be limited to one notch. Standard & Poor's view of the stand-alone credit quality of both TM and NEMI remains unchanged. Outlook The stable outlook reflects Standard & Poor's expectation that capitalization will be maintained at a level that supports the ratings on both TM and NEMI to offset our continuing concerns regarding FL Group's debt leverage. In this respect, we will continue to monitor the parent's actions to reduce leverage, as well as its dividend flows from TM and NEMI. An upgrade is regarded as unlikely in the medium term, based on information currently available. Conversely, any significant unexpected deterioration in the TM group's capitalization may lead to a downgrade. Ratings List Downgraded; CreditWatch/Outlook Action To From Tryggingamidstodin hf. NEMI Forsikring ASA Counterparty Credit Rating Local Currency BBB-/Stable/-- BBB/Watch Neg/-- Financial Strength Rating Local Currency BBB-/Stable/-- BBB/Watch Neg/--