Best Affirms Rating for New Technology Insurance

November 30, 2004

A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and assigned an issuer credit rating of “a-“to New Technology Insurance (NTI) (Ireland), the insurance subsidiary of The Carphone Warehouse Group plc (CPW) (United Kingdom). The outlook for both ratings is stable.

The ratings reflect NTI’s excellent risk-adjusted capitalisation and strong operating performance, which is partially offset by a limited expansion of third party business.

A.M. Best expects NTI’s 2005 prospective risk-adjusted capitalisation to remain excellent as the additional capital required by an anticipated increased business volume is likely to be offset by reduction in credit risk due to faster premium collection and retained earnings of approximately GBP 30 million (USD 56 million). NTI’s operating performance is likely to be strong in 2005 with a return on premium of approximately 30%. Underwriting results will be negatively affected by higher commission payments for the UK business, leading to a deterioration in the combined ratio to approximately 75% from 54.5% in 2004.

Gross written premiums are likely to increase to approximately GBP 95 million (USD 178 million) by the end of March 2005 from GBP 32.8 million (USD 60.4 million) in 2004, following the completion of the transfer of business from the Phone House Insurance Limited (PHIL) and The Carphone Warehouse Insurance Limited (CWIL). NTI’s third party business has not grown as originally anticipated in 2004 as a result of the company’s stronger focus on the transfer of the portfolios from PHIL and CWIL.

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