S&P Raises British Marine Ratings To ‘A+’; Outlook Stable

April 4, 2007

Standard & Poor’s Ratings Services has raised its long-term counterparty credit and insurer financial strength ratings on Luxembourg-based marine insurer British Marine Luxembourg S.A. (BM) to “A+” from ‘A’. S&P also removed the ratings from CreditWatch, where they had been placed with positive implications on Jan. 29, 2007, and assigned a stable outlook.

“The upgrade reflects both the completion of the transfer of the run-off reserves currently held by British Marine Holdings to Equator Reinsurances Ltd., a core entity of QBE Insurance Group Ltd., and the subsequent change to BM’s group status to core from strategically important,” explained S&P credit analyst Ali Karakuyu.

S&P noted that the “change to BM’s core status enables the ratings on BM to be equalized with those on other core subsidiaries of its ultimate parent, QBE Insurance Group Ltd.,” which S&P rates “A+” with a stable outlook. “BM’s group status reflects the strength of the explicit support provided to BM by QBE,” the bulletin continued. “This comes in the form of a substantial quota share provided to BM by Equator Reinsurances Ltd. (A+/Stable/–) with effect from Jan. 1, 2007.”

S&P also indicated that its “ratings on BM continue to reflect the company’s stand-alone characteristics, including its strong overall capitalization, strong operating performance, and strong competitive position.

“Offsetting these factors are the high level of industry risk associated with marine business relative to other insurance classes and BM’s heavy reliance on reinsurance to write the large protection and indemnity limits.

“The stable outlook on BM reflects the stable outlook on other core entities of QBE. As a core subsidiary of QBE, the ratings on BM will move in tandem with those on the parent. Preservation of BM’s core status will be contingent on the continuation of the group’s explicit support, and the ongoing maintenance of its stand-alone capitalization at a level at least consistent with its public rating.”

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