S&P’s Affirms DaVinci Re ‘A’ Ratings; Outlook Stable

March 6, 2003

Standard & Poor’s has affirmed its ‘A’ counterparty credit and financial strength ratings on DaVinci Reinsurance Ltd. (DaVinci) based on the new company’s very strong operating performance, high capital adequacy, and strong business volume in its first full year of operations.

Offsetting these positive factors is the potential operating volatility inherent in high-severity, low-frequency risk underwriting. Standard & Poor’s also said that the outlook on DaVinci is stable.

“The operating performance of DaVinci’s catastrophe business is expected to be similar to that of its sponsor, Renaissance Reinsurance Ltd. (RenRe),” Standard & Poor’s credit analyst Karole Dill Barkley said. Capital is expected to remain strong, and RenRe is expected to retain voting control of DaVinci. DaVinci’s ROE is expected to average 15 percent, though in a high-catastrophe year, earnings would be lower.

RenRe has demonstrated market-leading underwriting performance in
property catastrophe risk and has been able to construct a portfolio for DaVinci that, to date, mirrors RenRe’s experience. In the wake of increased demand for strong property catastrophe capacity and RenRe sponsorship, DaVinci Re has attracted a sizable book of business with good diversification.

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