Best Affirms FSR for Caisse Centrale de Reassurance

March 18, 2005

A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and the issuer credit rating of “aa” of Caisse Centrale de Reassurance (CCR) (France). The outlook for both ratings remains stable.

The ratings reflect A.M. Best’s opinion that CCR will remain the only French reinsurer providing unlimited cover for catastrophic perils and nuclear and terrorist risks, despite a reduction in the duration of the Natural Catastrophe reinsurance agreement between CCR and the French insurance market.

The company will continue to benefit from the explicit support of the French State (CCR’s shareholder) in the form of a stop loss. CCR maintains its superior risk-adjusted capitalization as the company’s probable maximum loss (PML) is limited through this stop loss. Counter party risk on reinsurance recoverables remains low, as the company uses highly rated reinsurers and the French State as its retrocessionaires.

A.M. Best believes that contract cancellations in tandem with rate increases implemented in 2004 are likely to lead to stable traditional business premium in 2005. Premium is expected to decrease by 8% over the following two years as the company continues to cancel unprofitable contracts and focuses on the objective of 8% return on equity by 2007 on this portfolio. Consolidated premium for 2005 is likely to increase by 4% due to rate increases on the State-backed business.

A.M. Best believes that profits are likely to improve in the next two years as the company focuses on the State-backed business (66% of consolidated premiums by 2007).

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