Best Downgrades RenRe Ratings; Keeps Under Review/Negative

November 4, 2005

A.M. Best Co. followed Standard & Poor’s and Fitch Ratings (See IJ Web site Nov. 3) in downgrading the financial strength ratings (FSR) and debt ratings of the operating subsidiaries of Bermuda-based RenaissanceRe Holdings Ltd.

Best announced that it has downgraded the FSR of Renaissance Reinsurance Ltd. to “A” (Excellent) from “A+” (Superior); the FSRs of the operating subsidiaries of Glencoe Group Holdings Ltd. to “A-” (Excellent) from “A” (Excellent); the FSRs of the operating subsidiaries of Overseas Partners Cat Limited to “A-” (Excellent) from “A” (Excellent); and the ICR of DaVinci Reinsurance Ltd. to “a” from “a+”. Best has also downgraded the issuer credit rating (ICR) of RenaissanceRe Holdings to “bbb” from “a-” and downgraded its debt ratings. All the ratings remain under review with negative implications.

“This rating action follows the recent announcement by RenaissanceRe that its chief executive officer, Jim Stanard, has resigned effective immediately and that John Lummis, the company’s chief financial officer, will be retiring from the company effective June 2006,” said Best. “These changes in management follow the receipt of “Wells Notices” from the Securities and Exchange Commission by Mr. Stanard and by RenaissanceRe itself earlier this year.

“The course of these events cumulatively is material to an organization of RenaissanceRe’s size and as a consequence, in A.M. Best’s opinion, may constrain its financial and operational flexibility over the near term. This disruption occurs at a time when the company is facing material losses from the third and fourth quarter hurricanes, which although financially manageable, have nonetheless resulted in a decline in the group’s risk-adjusted capital at a time when its financial flexibility is somewhat constrained.”

Best indicated that the “downgrade of the Glencoe group of companies not only reflects the issues at RenaissanceRe but also Glencoe’s poor operating performance over the last two years due to the group maintaining a high concentration of catastrophe exposure in Florida, which has sustained numerous hurricanes over the last two years.

“The downgrade of DaVinci’s ICR also reflects issues at RenaissanceRe combined with its operating performance over the last two years. The newly assigned ICR of ‘a’ and the FSR of ‘A’ (Excellent) remain under review with negative implications as A.M. Best completes its evaluation of the company, which will include an evaluation of its capital requirements. DaVinci’s business is underwritten through a subsidiary of RenaissanceRe and its financial results are consolidated into RenaissanceRe.”

Best indicated that all of the ratings would remain under review while it “evaluates the changes in the management at RenaissanceRe along with any capitalization plans for its insurance and reinsurance subsidiaries.”

The bulletin added: “As a market leader in global property catastrophe reinsurance, RenaissanceRe remains exposed to high severity losses associated with catastrophic events on a worldwide basis. However, as a result of the severity and frequency of catastrophic events in 2005, reinsurance property catastrophe pricing is expected to increase and benefit the group in the near term. A.M. Best will continue to monitor the group’s risk-adjusted capital and financial leverage ratios and expects them to remain within acceptable ranges to support its new financial strength and debt ratings.”

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