Best Rates Asia Capital Re ‘A-‘

December 7, 2006

A.M. Best Co. has assigned a financial strength rating (FSR) of “A-” (Excellent) and an issuer credit rating (ICR) of “a-” to Singapore-based Asia Capital Reinsurance Group Pte. Ltd. (ACR) with a stable outlook.

“ACR will operate as a Singapore-based reinsurance company exclusively focused on Asian risk,” said Best. “The company will write both treaty business as well as facultative business and will be capitalized with US$565 million in common equity. The company will be a fully owned subsidiary of ACR Capital Holdings Pte. Ltd. whose investors include 3i, Khazanah Nasional Berhad, affiliated investment funds of Och Ziff Capital Management Group, Morgan Stanley Private Equity Asia, Credit Suisse Private Equity Asia and the Luxembourg Sicav ‘Worldwide Sicav’.”

Best said its ratings “reflect ACR’s solid capitalization, experienced management team and sound business plan. The assumptions used in the business plan do not deviate from the Asian market average, and the business plan anticipates a controlled rate of premium growth with underwriting leverage well below 1x.

“In determining the ratings, A.M. Best was concerned with ACR’s existing infrastructure. Additionally, several key operational positions have yet to be filled. A.M. Best perceives these as risk factors that could be detrimental to ACR’s ability to fully execute its current business plan. However, these concerns are not sufficient to preclude the assignment of an FSR of A- (Excellent).”

The ratings report also indicates that Best “anticipates ACR will be challenged by increased competition from the established reinsurance companies in Asia as they have strengthened their capitalization in recent years. The additional capacity brought to the market with no recent major reinsurance losses in Asia could dampen expected returns if pricing of reinsurance coverage fails to meet anticipated levels. Furthermore, the ability of ACR to effectively build and retain market acceptance will only be proven over time.”

Best said it would “closely monitor the quarterly performance of ACR against its stated business plan, and any material negative deviations in terms of management, earnings, capitalization or risk profile could result in downward pressure on the assigned ratings.”

Source: A.M. Best

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