A.M. Best Affirms FSR for Trust International

July 23, 2004

A.M. Best Co. has affirmed the financial strength rating of B+ (Very Good) of Trust International Insurance Company E.C. (TIIC) (Bahrain). The outlook has been revised to positive from stable. At the same time, A.M. Best has assigned an issuer credit rating of “bbb-” to TIIC. The outlook for this rating is also positive.

The ratings reflect improvements in the company’s underlying underwriting performance, prospective maintenance of risk-adjusted capitalization and its leading business profile in its core markets. An offsetting factor continues to be TIIC’s high reliance on retrocessional cover.

TIIC’s positive underwriting results for the last three years (2001-2003) reflect the positive effect of stricter underwriting guidelines and confirm an end to the earnings volatility experienced up to 2000 when combined ratios were well above 100 percent. A.M. Best believes the company’s combined ratio is likely to stabilize at around 85 percent (expected for year-end 2004).

An increase in prospective retained earnings in 2004 and 2005 will ensure TIIC maintains its current level of risk-adjusted capitalization after factoring the proposed additional marketing initiatives in North Africa and Middle and Far East Asia. These initiatives will enhance TIIC’s business profile as a leading onshore and offshore energy reinsurer in the Arab and Afro-Asian markets.

The company continues to cede in excess of 85 percent of premiums, and overall it has a comprehensive retrocessional programme with high quality companies, although a small proportion of the cover is provided by unrated companies.

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