S&P Revises Outlook on Global Reinsurers from Stable to Negative; To Hold Telephone Conference

September 29, 2005

Standard & Poor’s Ratings Services announced that it has revised its outlook on the global reinsurance industry to negative from stable. The news appears in a report, published today, entitled “Near-Term Strains On Reinsurers’ Financial Strength After Katrina Lead To Negative Global Reinsurance Outlook.” The rating agency will hold a telephone conference on Friday, Sept. 30, to discuss the report.

“The negative outlook implies that downgrades are expected to outnumber upgrades in the remainder of 2005, although the number of downgrades is expected to be modest,” said S&P. “The negative outlook reflects the near-term strains on financial strength arising from the impact reported by reinsurers of the most expensive loss event in the industry’s history, Hurricane Katrina,” stated S&P credit analyst Simon Marshall. “It also reflects the uncertainties that necessarily surround the companies’ estimations of the effect of an event of Katrina’s size and type. The impact of Hurricane Rita, though likely to be limited compared with Katrina, compounds our concerns,” he added.

S&P notes that the “impact of Katrina and Rita on financial strength is expected to be moderately negative. Concerns include the operating performance of the industry in 2005 and the financial flexibility of those wishing to raise new capital; the availability and affordability of retrocession cover for such events for the remainder of the year and beyond; and the apparent growing frequency of large loss events and the difficulties inherent in modeling and pricing such risks adequately. These concerns are partly offset by the continuation of the hard market, which Katrina and Rita are likely to ensure, and with it, the prospects for strong non-life underwriting performance in 2006 and 2007.”

Marshall indicated: “Standard & Poor’s will review its outlook when the impact of Katrina becomes clearer and when the catastrophe season has run its course.” S&P warned, however, that the “”number of downgrades may be greater than expected if reinsurers’ loss estimates for Katrina prove inadequate or if additional material catastrophic events occur in the coming months; financial flexibility could become a key factor in this eventuality.”

On the other hand the rating agency said the outlook may be revised upwards to stable, “if the near-term strains on financial strength are addressed and if the uncertainties surrounding Katrina are resolved. The strong underlying non-life operating performance of the industry, as evidenced by a strong January 2006 renewal season, could be a trigger for a stable outlook. Also key will be the industry’s response to the challenges of writing property catastrophe business highlighted by Katrina.”

The telephone conference will take place at 11:00 a.m. Eastern Time. “The call will feature a discussion of the impact of Hurricanes Katrina and Rita on the global Insurance industry. The discussion participants will include credit analysts Tom Upton, John Iten, Damien Magarelli, and Polina Chernyak of Standard & Poor’s Financial Services Ratings’ Division, and Simon Marshall from our London office,” said the bulletin.

“Any related articles will be posted on the home page of our public Web site: www.standardandpoors.com under the Hot Topics” section, ‘Hurricanes Katrina/Rita,” it continued. “Please note that Standard & Poor’s offers all of its broadcast teleconference calls to all interested participants on a complimentary basis. The call will begin promptly at the time indicated. Please call at least 15 minutes before the scheduled start of the call to complete the pre-call registration process. Live Dial-in Numbers: US/All Others: (1) 210-839-8781 UK: (44) 20-7943-5370 Conference ID No.: 2995438 Passcode: SANDP Replays: Recorded replays of the call are made available about an hour after the call concludes and will be available until Friday, Oct. 7, 2005. Replay number: (1) 203-369-3292 RealAudio™: The call will also be available live in “listen-only” mode at www.events.standardandpoors.com for listeners with the Real Player™ software, sound card, and speakers. The RealAudio™ playback will be available until Friday, Oct. 28, 2005.

The report iitself is available to subscribers of RatingsDirect, Standard & Poor’s Web-based credit research and analysis system, at www.ratingsdirect.com. If you are not a RatingsDirect subscriber, you may purchase a copy of the report by calling (1) 212-438-9823 or sending an e-mail to research_request@standardandpoors.com. Ratings information can also be found on Standard & Poor’s public Web site at www.standardandpoors.com;

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