Ratings Recap: Russian Re, KAMP RE, Arab Group, NIPPONKOA (Asia), Tapiola

December 12, 2007

A.M. Best Co. has assigned a financial strength rating of ‘B+’ (Good) and an issuer credit rating of “bbb-” to Russian Reinsurance Company with a stable outlook. “The ratings reflect Russian Re’ s good risk-adjusted capitalization, excellent and consistent operating performance,” said Best. “Offsetting factors include its relatively small size in the highly competitive operating environment and the lack of diversification in its investment portfolio.”

Standard & Poor’s Ratings Services has revised its ‘CC’ senior secured debt rating on KAMP RE 2005 Ltd.’s $190 million floating-rate principal-at-risk notes to ‘D’. The rating had been on CreditWatch with negative implications. S&P said that on Nov. 5, 2007, it had received a copy of a proof-of-claim notice from the administrator for KAMP RE 2005 Ltd. “This claim put the ultimate net losses associated with Hurricane Katrina in excess of the transaction’s $1 billion trigger amount,” explained S&P credit analyst Gary Martucci. “KPMG Cayman Islands, the claims-review agent, has verified that the paid losses incurred by the cedent are in excess of the transactions trigger amount of $1 billion.” KAMP RE is the first large special purpose vehicle, or “sidecar,” where loss exposures have exceeded the amount of the securitization.

A.M. Best Co. has assigned a financial strength rating of ‘B++’ (Good) and an issuer credit rating of “bbb” to Bahrain-based Arab Insurance Group (B.S.C.) (ARIG) with a stable outlook. “The ratings reflect ARIG’ s strong and improving business profile, good risk-adjusted capitalization and sophisticated risk management,” said Best. “Despite the significant technical losses experienced in recent years, A.M. Best believes that given a number of management actions to improve the quality of the company’ s insurance portfolio, the reliance on investment returns to generate bottom line profits is expected to reduce drastically in the next two to three years.”

A.M. Best Co. has assigned a financial strength rating of ‘A’ (Excellent) and an issuer credit rating of “a” to Hong Kong-based NIPPONKOA Insurance Company (Asia) Limited (Nipponkoa Asia) with a stable outlook. “The ratings reflect Nipponkoa Asia’ s strong risk-adjusted capitalization, consistent operating profitability and conservative investment strategy,” Best noted. “The ratings also recognize the operational support from its parent company, NIPPONKOA Insurance Company Limited (Nipponkoa Insurance).”
Best described Nipponkoa Asia, as “a strategically important subsidiary” of the Japanese insurance Group, which “mainly serves Japanese clients in the East Asia region.”

A.M. Best Co. has affirmed the financial strength rating of ‘A ‘(Excellent) and the issuer credit rating of “a” of Finland’s Tapiola General Mutual Insurance Company (also known as Keskinainen Vakuutusyhtio Tapiola) with a stable outlook. “The ratings reflect the company’s strong consolidated risk-adjusted capitalization and excellent business profile in the Finnish market,” said Best. “An offsetting factor is Tapiola’s underwriting performance.” Best also noted that the Company “enjoys an excellent position in the Finnish market as the third-largest non-life insurer with a growing market share (currently 18.5 percent).”

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