Ratings Recap: London General, AIG Global Trade, Kiln, PartnerRe (Europe), New Technology, Radian (Europe), Allied World

December 17, 2007

A.M. Best Co. has affirmed the financial strength ratings of ‘A-‘ (Excellent) and issuer credit ratings of “a-” of London General Insurance Company Limited (LGI) and London General Life Company Limited (LGL) with a stable outlook for both. Best said the ratings reflect its “view that LGI and LGL are likely to maintain excellent risk-adjusted capitalization in 2007 and 2008. Both companies benefited from the cancellation of a major reinsurance contract in 2005, which has reduced the companies’ reinsurance recoverables and the associated counterparty risk.”

A.M. Best Co. has affirmed the financial strength rating of ‘A+’ (Superior) and the issuer credit rating of “aa-” of AIG Global Trade & Political Risk Insurance Company of New Jersey, a wholly owned subsidiary of American International Group (AIG), with a stable outlook. Best also noted that it has withdrawn the ratings and assigned a category NR-5 (Not Formally Followed) at the request of management. Best explained that “AIG Global Trade & Political Risk had been group rated with AIG. AIG Global Trade & Political Risk is an internal reinsurer to the operating entities within AIG’s General Insurance Operations and is not issuing policies directly.”

A.M. Best Co. has placed the issuer credit rating (ICR) of “bbb+” of Kiln Ltd. and the ICR of “bbb+” of Kiln (UK) Holdings Limited (Kiln UK) under review with positive implications. Best also placed the debt ratings of “bbb” on the $30 million and $35 million floating rate subordinated bonds issued by Kiln UK under review with positive implications. Best’s ratings on Lloyd’s Syndicate 510, which is managed by R.J. Kiln & Co Ltd., remain unchanged. “These rating actions follow the announcement that Kiln’s board of directors has decided to recommend to shareholders a cash offer for the shares of Kiln by Tokio Marine & Nichido Fire Insurance Company Ltd.” Best explained. “The “positive implications reflect Best’s view that the “acquisition may improve Kiln’s financial flexibility.”

A.M. Best Co. has assigned a financial strength rating (FSR) of ‘A+’ (Superior) and an issuer credit rating (ICR) of “aa-” to Partner Reinsurance Europe Limited (PREEL), which is based in Ireland. The outlook for both ratings is stable. “The ratings of PREEL are based on its initial strong risk-adjusted capitalization, excellent business position, well diversified portfolio and its prominent role within the Bermudan-based PartnerRe Group, together with the support of Partner Reinsurance Ltd (Bermuda) through a quota share
retrocession agreement,” said Best. “The rating also factors excellent pro forma net income in 2006 and 2007.” The Company is scheduled to be fully operational as of the first of January 2008. At that time, Best noted, it will “underwrite the existing portfolio of PartnerRe SA (France, and the Zurich branch of PartnerRe Ltd, with the exception of the Canadian life business, which will be directly managed by Partner Reinsurance Company Limited.”

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and the issuer credit rating of “a-” of Irish-based New Technology Insurance (NTI), an insurance subsidiary of the UK’s Carphone Warehouse Group plc (CPW) with a negative outlook. “The ratings reflect NTI’s strong risk-adjusted capitalization and very good—although declining—overall earnings offset by a further increase in risk concentration within the CPW, and a sluggish business profile.”

Fitch Ratings has withdrawn the ‘AA-‘ insurer financial strength (IFS) rating of Radian Europe Ltd. (Radian Europe) due to its parent company’s (Radian Group Inc.) decision not to pursue European mortgage insurance business at this time. Radian Europe has not underwritten any insurance or reinsurance transactions nor has it assumed any liabilities from any other company existing policies or treaties.

Standard & Poor’s Ratings Services said today that its ratings on Bermuda-based Allied World Assurance Co. Holdings Ltd. and related subsidiaries (collectively referred to as Allied World) are not affected by the Company’s “recent announcement that it will repurchase $563 million of its common shares from its founding investor American International Group Inc.” S&P said it “believes that AIG’s exit as a major shareholder is neutral to the rating, as Allied World has operated as an independent entity for some time. In addition, this repurchase supports the group’s strategy to manage its capital base in accordance with the softening market conditions.”

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