Best Puts Alea Ratings Under Review; Company Response; SEC Subpoena

June 10, 2005

A.M. Best Co. announced that it has placed the financial strength rating of “A-” (Excellent) and the issuer credit rating of “a-” of the insurance and reinsurance operating subsidiaries of Bermuda-based Alea Group Holdings Ltd. under review with negative implications.

The action applies to Alea London Limited, Alea (Bermuda) Limited, Alea Europe Limited, Alea North America Insurance Company, Alea North America Specialty Insurance Company, Alea Global Risk Limited and Alea Jersey Limited.

Best said it had taken the rating action based on its “opinion that Alea’s prospective risk-adjusted capitalisation is under pressure and that the potential exists for further volatility in prior year loss reserves.” The rating agency noted that the rating will remain under review until it can “fully assess the situation, although it is expected that Alea will address the prospective capital strain during the third quarter of 2005.”

Alea issued a response indicating that it is currently in discussions with Best over the situation and has been told that the rating agency will require the company to significantly increase its capital to maintain its rating.

“We are disappointed with AM Best’s decision,” stated CEO Mark L. Ricciardelli. “Nonetheless, Alea is considering the most appropriate and expedient method for addressing AM Best’s concerns and to maintaining its ratings, which would include raising additional capital, the exact form of which we will begin discussing with our financial advisors.”

In an unrelated development, Alea also announced that on June 9, 2005, it received a subpoena from the Securities and Exchange Commission for documents relating to certain non-traditional, or loss mitigation [finite reinsurance] insurance products in connection with the ongoing investigation into their possible use to distort financial statements (See related articles). Alea said it “intends to fully cooperate in responding.”

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