S&P Affirms Norwegian Hull Club ‘A’ Ratings, Stable Outlook

July 6, 2006

Standard & Poor’s Ratings Services has affirmed its “A” long-term counterparty credit and insurer financial strength ratings on Norway’s marine insurer Norwegian Hull Club (NHC or the club) with a stable outlook.

“The ratings reflect the club’s very strong capitalization, strong competitive position, and strong financial flexibility, offset by good operating performance in what is regarded as a volatile and cyclical market and a lack of diversity as a pure marine underwriter,” said S&P. It also noted that “NHC is a Norwegian mutual insurance club, writing marine hull insurance for domestic and international shipping companies.”

“The stable outlook reflects our expectation of continued good operating performance in the short term, with a combined ratio of about 100 percent in 2006 and 2007,” stated S&P credit analyst Thorbjørn Børs.

S&P said: “Over the underwriting cycle, earnings will deteriorate, but not to the levels seen in 1999-2002. NHC’s competitive position is expected to remain strong, with little near-term premium growth. The club will maintain its focus on vessel quality and profitability. Capitalization will remain very strong, with extremely strong capital adequacy as measured by Standard & Poor’s risk-based capital model. There is very little upside potential to the ratings currently. Although unlikely, there would be downward pressure on the ratings if the club’s capitalization were to deteriorate significantly.”

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