S&P Rates Tryggingamidstödin ‘BBB’; Outlook Stable

May 3, 2007

Standard & Poor’s Ratings Services has assigned its ‘BBB’ long-term counterparty credit and insurer financial strength ratings to Icelandic insurer Tryggingamidstödin hf. (TM) with a stable outlook.

“The ratings reflect TM’s good capitalization and good competitive position,” stated S&P credit analyst Peter McClean. “These strengths are partially offset by the Icelandic insurance market’s high industry and economic risk profile and TM’s marginal operating performance.”

S&P said the stable outlook reflects its “expectation that TM’s capital adequacy will be maintained at very strong levels in order to remain supportive of the ratings” and would offset S&P’s “continuing concerns regarding quality of capital.

“In this respect, the retirement of debt is expected to reduce leverage to below 30 percent. Standard & Poor’s will continue to monitor these factors, as well as the dividend policy in terms of both the external payout and the internal dividend requirement from NEMI. A marginal improvement in underwriting profitability in Iceland and a return by NEMI toward its recent levels of profitability are expected to result in a consolidated combined ratio of about 110 percent in 2007.

“An upgrade is regarded as unlikely in the medium term. Conversely, any significant deterioration in the TM group’s capitalization may lead to a downgrade.”

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