S&P Affirms Alliance Re ‘BBB’ Ratings

May 19, 2006

Standard & Poor’s Ratings Services announced that it has affirmed its “BBB” long-term counterparty credit and insurer financial strength ratings on Cyprus-based Alliance International Reinsurance Public Co. Ltd. with a stable outlook.

“The ratings reflect Alliance Re’s strong capitalization, experienced management team, and risk management skills,” said S&P. It added, however, “these positive factors are offset by the company’s restricted competitive position and susceptibility to increased competition and softening market conditions.”

“We expect that capitalization will be maintained at a strong level, supported by extremely strong capital adequacy,” stated S&P credit analyst Thorbjørn Børs. “A positive outlook is viable, and is likely to be driven, in addition to the above expectations, by further development of core markets as well as ancillary business streams, which would serve to soften the vulnerability of competitive pressures.

Nevertheless, the competitive position of Alliance Re is expected to remain a rating constraint,” the bulletin continued. “Furthermore, a positive outlook is also likely to be a reflection of further enhancements to the company’s enterprise risk management, which is an evolving process,” Bors added.

However, S&P also noted that a “deterioration in operating performance could lead to a negative ratings outlook.”

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