Ratings Roundup: Gard M&E, Industriforsikring, Eureko, Echelon

May 20, 2008

Standard & Poor’s Ratings Services has assigned its ‘A+’ long-term counterparty credit and insurer financial strength ratings to Sweden-based marine insurer Gard Marine & Energy Försäkring AB (Gard M&E AB) with a stable outlook. “The ratings reflect the company’s membership of the Gard group, of which the principal operating entities are Norway-based mutual protection and indemnity association Assuranceforeningen Gard – gjensidig – (Gard P&I; A+/Stable/–) and its Bermuda-based sister mutual Gard P & I (Bermuda) Ltd.,” S&P explained. “The ratings also reflect the explicit support provided by the company’s parent, Bermuda-based marine hull insurer Gard Marine & Energy Ltd. (Gard M&E; A+/Stable/–). Gard M&E AB is a newly-formed subsidiary established to write Gard M&E’s business in the EU and European Economic Area. Under a reinsurance agreement, Gard M&E assumes 90 percent of the risks of Gard M&E AB, and the company estimates that it will channel some 25 percent of its business through the new subsidiary. Gard M&E AB intends to operate under the same policies, management systems, and guidelines as the rest of the Gard group.” S&P said the stable outlook on Gard M&E AB reflects the outlook on the principal operating entities of the Gard group through the explicit support provided by Gard M&E.”

Standard & Poor’s Ratings Services has affirmed its ‘BBB’ long-term counterparty credit and insurer financial strength ratings on Norwegian captive insurer Industriforsikring a.s. Subsequently, S&P withdrew the ratings at the company’s request; therefore it is no longer subject to ongoing surveillance by S&P. The Company is a wholly owned captive insurer of Norsk Hydro ASA. S&P said “We consider that Industriforsikring qualifies as a captive insurer under our captive rating methodology, and as such, we rate it at a level commensurate with its parent. The outlook at the time of withdrawal was stable, which reflects the current stable outlook on Norsk Hydro.”

Standard & Poor’s Ratings Services has assigned its ‘BBB’ long-term subordinated debt rating to the €225 million ($352.6 million) perpetual, unsecured, junior subordinated, callable capital securities that are expected to be issued by Netherlands-based Eureko B.V. (rated ‘A-‘ with a stable outlook) on May 23, 2008, under its €2.5 billion ($3.918 billion) “Program for the Issuance of Debt Instruments.” S&P said the capital securities will be eligible for designation as Category 2 (“strong”) under its classification of hybrid equity instruments. As such, they will be fully eligible for inclusion up to a maximum of 25 percent of the total capital number that S&P uses in its consolidated risk-based capital analysis of the Eureko group. “The capital securities are expected to qualify as hybrid Tier-1 capital for regulatory purposes.”

A.M. Best Co. has assigned a financial strength rating (FSR) of ‘B++’ (Good) and issuer credit rating (ICR) of “bbb+” to Ontario-based Echelon General Insurance Company. Best also assigned an ICR of “bb+” to Echelon General’s publicly traded parent, EGI Financial Holdings Inc. (EGIFHI). All of the ratings have a stable outlook. “The ratings for Echelon General are reflective of its strong risk-adjusted capitalization and operating performance, improved product line and geographic diversification, experienced management team in the non-standard auto and niche product markets as well as the additional financial flexibility of EGIFHI,” said Best.

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