S&P Raises Ratings on Swedish Marine Mutual Club to ‘BBB’

July 6, 2005

Standard & Poor’s Ratings Services announced that it has raised its long-term counterparty credit and insurer financial strength ratings on Sweden’s marine mutual insurer The Swedish Club (the club) to ‘BBB’ from ‘BBB-‘ with a stable outlook.

“The upgrade reflects further improvements in operating performance and our perception of stronger underwriting discipline,” stated S&P credit analyst Thorbjørn Børs. S&P said the “ratings on The Swedish Club also reflect the club’s good capitalization, good competitive position, and strong financial flexibility (defined as the ability to source capital relative to needs).”

However, the rating agency noted: “These positive factors are partially offset by the club’s small size, leading to a dependence on reinsurers, and heavy participation in equity markets.”

S&P said the stable outlook is based on its “expectation that stronger underwriting discipline will be maintained, avoiding a return to the weaker results seen in 1999-2002. Good surpluses are expected over the next two years. A combined ratio of about 105 percent is expected for 2005 and 2006, with slightly reduced positive run-offs emerging from the reserves. Aided by investment income, free reserves will continue to increase during 2005 and 2006 in line with the increase in premiums. Reserving will remain conservative.”

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