A.M. Best Assigns Rating to Tokio Millennium Re Ltd.

June 17, 2003

A.M. Best Co. has assigned a financial strength rating of A++ (Superior) to Tokio Millennium Re Ltd. (TMR), a Bermuda reinsurance subsidiary of The Tokio Marine and Fire Insurance Company Ltd (TMF), Japan. The rating outlook for both TMR and TMF is negative. The outlook reflects the persistent unfavorable economic conditions challenging TMF in Japan.

The rating of TMR reflects the strategic role the company serves and the support it receives from TMF. TMR maintains an extremely strong financial position relative to its expected business needs. Moreover, TMR also enjoys the explicit support of its parent company in the form of an extensive net worth maintenance agreement.

TMR has established a growing presence as an innovative catastrophe underwriter and manager of insurance risks. A.M. Best views TMR as strategically important to TMF as it helps accomplish the parent’s goal of enhancing capital utilization through arranging exchanges of natural catastrophe exposures and underwriting uncorrelated risks in the worldwide reinsurance market and by engaging in alternative risk mitigation strategies. As part of TMF, TMR enjoys the benefits of having one of the most recognizable names in the international insurance industry and is able to attract business on a global basis. TMR’s conservative investment policy minimizes liquidity and credit risks, which is consistent with the nature of its catastrophe insurance liabilities.

Offsetting factors include the company’s relatively limited operational experience and the volatility inherent in its catastrophe reinsurance activities. Operating results have been favorable since its inception in early 2000.

However, TMR’s risk management strategies have yet to be tested by a significant natural catastrophe. Accordingly, TMR’s ability to further diversify the risks of the TMF group on a global basis – at acceptable terms – will be affected by global reinsurance market conditions.

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