Best Assigns Ironshore ‘A-‘ Rating

February 13, 2007

A.M. Best Co. has assigned a financial strength rating (FSR) of “A-” (Excellent) and an issuer credit rating (ICR) of “a-” to Bermuda-based Ironshore Insurance Ltd. Concurrently, Best assigned an ICR of “bbb-” to Ironshore’s Cayman Islands holding company, Ironshore Inc. The outlook for all ratings is stable.

In a separate bulletin Ironshore’s CEO Robert V. Deutsch commented: “We are very proud to have earned such a positive rating ahead of schedule and under the intense scrutiny of AM Best’s new company rating process. With this recognition of our strong balance sheet, operating model and business profile, we look forward to providing worldwide property insurance to businesses in need, particularly in the hurricane-prone coastal areas of the U.S.”

Best noted: “Ironshore will operate as a Bermuda based insurance company focused on broker sourced commercial property coverage located throughout the world, with its initial emphasis in the Gulf region of the United States (See IJ web site Jan. 8).

“Ironshore’s principal market profile will be in property catastrophe and property all-risk coverage. Currently, Ironshore is capitalized with approximately $1 billion in common equity from investors, which include Bear Stearns Merchant Banking, Corporate Partners II Limited, Fremont Partners III, L.P., TowerBrook Investors II, L.P. and Greenhill Capital Partners, II L.P.”

Best indicated that the ratings “reflect Ironshore’s solid capitalization, conservative business plan and an experienced and highly regarded management team. In addition to meeting A.M. Best’s previously established requirements for new company formations, the assigned ratings also reflect Ironshore’s ability to meet A.M. Best’s stricter risk-based capital requirements for property catastrophe companies.”

“Ironshore’s current infrastructure is more than adequate to service present business requirements. The company’s management team has established a comprehensive operating plan to enhance current systems intended to increase efficiency and service anticipated future growth.”

However, Best added a caveat indicating that “in addition to being susceptible to low frequency high severity events,” the rating agency “anticipates that Ironshore will be challenged by increased competition from both established excess and surplus companies and possibly from recent start-ups entering its targeted markets as a result of the recent Florida insurance legislation. The additional capacity brought to the market could dampen expected returns if pricing of insurance coverage fails to meet anticipated levels.

“Furthermore, the ability of Ironshore to effectively build and retain market acceptance will only be proven over time.” Best indicated that it “will closely monitor the quarterly performance of Ironshore 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.”

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