Best Downgrades Rating for Cayman General Insurance

December 30, 2004

A.M. Best Co. has downgraded the financial strength rating to B- (Fair) from A- (Excellent) of Cayman General Insurance Company Limited (Cayman General) (Cayman Islands). The rating remains under review with negative implications.

This rating downgrade reflects the magnitude of the damage caused by Hurricane Ivan and the significant amount of estimated losses affecting Cayman General’s risk-adjusted capital position. This rating action also recognizes the anticipated substantial decline in Cayman General’s capital base due to the accumulation of losses from Hurricane Ivan. As a result of the company not providing A.M. Best with hurricane loss information and a recapitalization plan, A.M. Best based this rating action upon industry loss estimates and Cayman General’s market share information.

In A.M. Best’s opinion, the company has limited access to substantial levels of additional capital that would return Cayman General to the secure rating range. Resolution of the under review status is predicated on the receipt of Cayman General’s current loss reserve position, a formal recapitalization plan and completion of the due diligence process.

A.M. Best placed Cayman General’s rating under review with negative implications on Sept. 15, 2004, reflecting the uncertainty surrounding its ultimate exposure to Hurricane Ivan and the potential impact on the company’s capitalization. A.M. Best’s concern centers on Cayman General’s risk-adjusted capitalization, particularly with regard to the elevated probable maximum loss and the company’s ability to absorb a subsequent catastrophic event.

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