Best Downgrades Issuer Credit Ratings of Transatlantic; Ratings Placed Under Review with Negative Implications

May 5, 2005

A.M. Best Co. has downgraded the issuer credit ratings to “aa-” from “aa” of Transatlantic Reinsurance Company, Putnam Reinsurance Company (both of New York, N.Y.) and Trans Re Zurich (Zurich, Switzerland), all reinsurance subsidiaries of Transatlantic Holdings Inc. (Transatlantic) (New York, N.Y.)

Concurrently, A.M. Best has downgraded Transatlantic’s issuer credit rating to “a-” from “a” and has placed these ratings and the financial strength rating of A+ (Superior) of each operating company under review with negative implications.

These rating actions follow A.M. Best’s ratings downgrade of various operating subsidiaries of American International Group Inc. (AIG), which beneficially owns approximately 60% of Transatlantic. Various AIG financial strength ratings were downgraded to A+ (Superior) from A++ (Superior) and issuer credit ratings to “aa-” from “aa+”.

A.M. Best will complete an independent review of Transatlantic’s ratings over the near term and reevaluate the level of rating enhancement it should continue to receive through its relationship with AIG.

As part of this review, A.M. Best will consider the stand-alone risk-adjusted capital position of Transatlantic, which has declined in recent quarters due an increase in operating leverage stemming from prior year loss development, catastrophe losses and from unrealized losses in Transatlantic’s investment portfolio.

The under review with negative implications on Transatlantic’s ratings reflects A.M. Best’s concern in this regard, as well as the negative rating pressure on its parent, AIG.

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