Best Affirms Glacier Re ‘A-‘ Ratings; Off Review; Outlook Negative

August 15, 2006

A.M. Best Co. has affirmed the financial strength rating of “A-” (Excellent) and the issuer credit rating (ICR) of “a-” of Swiss-based Glacier Reinsurance AG. Best also removed the ratings from under review with negative implications, but assigned them a negative outlook.

“The affirmation reflects the restoration of Glacier Re’s risk-adjusted capitalization through a capital injection,” said Best. “The ratings also factor the company’s reduced catastrophe exposure and the revised business forecast for 2006.”

Best explained: “Glacier Re’s shareholders’ funds have been strengthened through a capital increase of $30 million following a decline of its risk-adjusted capitalization due to significant and higher than expected losses at year-end 2005 from US hurricanes. The company has also revised its business plan for 2006 and is planning to write a reduced amount of catastrophe retrocession premiums in favor of less volatile property business. In addition, Glacier Re has reviewed its overall catastrophe exposure following the US hurricane claims in 2005, resulting in lower probable maximum loss for windstorms in 2006.”

The rating agency also indicated that it “believes that Glacier Re has taken steps to alleviate concerns about its risk management.” Best said it “will closely monitor the effectiveness of the new strategies and procedures with each catastrophic event,” and that it “expects Glacier Re’s initiatives to stabilize its balance sheet and produce excellent earnings in 2006, given the loss in its first year of trading and the increase of claims reserves in respect of the Wilma hurricane in the first six months of 2006.”‘

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