Ratings Recap: XL, Allianz Global, Taiwan Fire, Emerson Re

August 22, 2007

Standard & Poor’s Ratings Services has affirmed its ‘A-‘ counterparty credit ratings on XL Capital Ltd. and its core operating companies with a stable outlook. “The ratings on XL are based on its very strong global market presence, diversified earnings stream, very strong investment portfolio and liquidity, and negligible asbestos and environmental exposure relative to its peers,” stated S&P credit analyst Steven Ader. “Enterprise risk management is adequate, and pending enhancements have the potential to revise our opinion to the strong level within 12 to 18 months.”

A.M. Best Co. has affirmed the financial strength rating (FSR) of “A” (Excellent) and the issuer credit rating (ICR) of “a+” of Germany’s Allianz Global Corporate & Specialty AG (AGCS). Best also affirmed the FSR of “A-” (Excellent) and the ICR of “a-” of French-based Allianz Global Corporate and Specialty (AGCS France). The outlook on all the ratings is stable. “The ratings of AGCS reflect the implicit support from its parent company, Allianz SE, in the form of a profit and loss absorption agreement,” Best explained. “Other factors include the successful integration of Allianz Global Risks Rueckversicherung-AG (AGR) and the industrial lines business of Allianz Versicherungs-AG (AV) into Allianz Marine & Aviation Versicherungs-AG (AMA), renamed Allianz Global Corporate & Specialty AG;” as well as the “company’s excellent risk-adjusted capitalization; and strong operating performance.”

Standard & Poor’s Ratings Services said that its “ratings on Taiwan Fire & Marine Insurance Co. Ltd. (TFMI; BBB+/Stable/–) would not be affected by the loss the insurer is likely to absorb from a fire that destroyed an aircraft belonging to China Airlines Ltd. on Aug. 20, 2007.” The total insurance claim is estimated at between 1 and 1.5 Taiwan dollars (app. US$30 to $45 million).

A.M. Best Co. has assigned debt ratings to the senior secured credit facilities due December 2011 of Emerson Reinsurance Ltd. (issuer), a newly created Cayman Islands exempted, limited life special purpose Class B insurer, with a stable outlook: The outlook for all ratings is stable, as follows:
— Senior Secured Series A Loans $185 million “a” Senior Secured Series B Loans $140 million “bbb-”
— Senior Secured Series C Loans $130 million “bb+” Senior Secured Series D Loans $ 45 million “bb-”
The primary business purpose for the creation of the issuer is for the issuance of the loans and the service and performance of various agreements entered into, including four reinsurance agreements (applicable to each series of loans) between the issuer and CIG Reinsurance Ltd. and New Castle Reinsurance Company Ltd. (collectively, cedants), which are class 4 insurance companies organized under the laws of Bermuda; the swap agreement between the issuer and the swap counterparty; and other covenants.

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