Ratings: Wiener Staedtische, AXA (Canada), Max Capital, Tryggingamidstödin, Aveta, Ansvar, Norwegian Hull

June 11, 2008

Standard & Poor’s Ratings Services has affirmed its ‘A-‘ junior subordinated long-term debt rating on the €250 million ($387 million) undated, subordinated notes issued by Austria-based Wiener Staedtische Versicherung AG Vienna Insurance Group (WSV AG; A+/Positive/–), following receipt of final documentation. “We have characterized the notes as having intermediate equity content because of their strong equity-like features,” said S&P. “This classification also reflects the notes’ subordinated nature, optional and mandatory interest deferability, and the fact that, although callable, they have no maturity date. WSV AG will mainly use the proceeds of the notes issue to fund further expansion in Central and Eastern Europe.”

A.M. Best Co. has upgraded the financial strength ratings (FSR) to ‘A’ (Excellent) from ‘A-‘ (Excellent) and issuer credit ratings (ICR) to “a” from “a-” of AXA Insurance (Canada) (Ontario), AXA Pacific Insurance Company (British Columbia) and AXA General Insurance Company (Newfoundland). Best also affirmed the FSR of ‘A’ (Excellent) and ICRs of “a” of the operating parent, AXA Assurances Inc. (Montreal, Quebec) and its other wholly owned subsidiary, AXA Assurances Agricoles Inc. In addition, Best affirmed the FSR of ‘A-‘ (Excellent) and ICR of “a-” of InnovAssur, Assurances Generales Inc. (Montreal, Quebec), and the ICR of “bbb” of AXA Canada Inc.(Montreal, Quebec), the parent holding company. The outlook for all ratings is stable. “The rating upgrades are a reflection of each company’s strong risk-adjusted capitalization and liquid balance sheets,” said Best. “In addition, AXA Assurance’s Inc. and its subsidiaries operate under a group structure, producing better than average profitability. Capital has been realigned within the group, and a new internal reinsurance arrangement implemented in 2007 has proportionately spread the overall financial performance of the group to each of the participating members. The ratings are reflective of the group’s market leadership position, brand name recognition and the synergies derived from common senior management, corporate governance, centralized support functions and geographic and product line diversification. These positive rating factors are partially offset by industry softening in commercial lines pricing; increased pressure from major competitors for market share; the potential for adverse reserve development due to construction liability claims in Western Canada; catastrophic earthquake exposure in British Columbia and Quebec; and the uncertainty regarding the long-term benefits of regulated product reforms to auto insurance in the companies’ major markets of Ontario and Alberta.”

Fitch Ratings has affirmed the ‘A-‘ Issuer Default Rating (IDR) of Max Capital Group Ltd. and the ‘A’ Insurer Financial Strength (IFS) ratings of its insurance subsidiaries, Max Bermuda Ltd., Max Re Europe Limited, Max Insurance Europe Limited and Max Specialty Insurance Company. Fitch also affirmed the ‘A-‘ IDR and ‘BBB+’ senior debt rating of Max USA Holdings Ltd., a direct, wholly owned holding company subsidiary of Max Capital. The ratings outlooks are stable. Fitch said its “ratings on Max Capital reflect the company’s disciplined and flexible approach to managing underwriting risk and investment risk, and favorable operating results. Partially offsetting these positives is the execution risk derived from Max Capital’s growing diversified specialty product strategy and reserve risk associated with the long-tail casualty reinsurance/insurance lines that the company started writing in 2002/2003.”

Standard & Poor’s Ratings Services has placed its ‘BBB’ long-term counterparty credit and insurer financial strength ratings on Iceland-based insurer Tryggingamidstödin hf.(TM) and its subsidiary Norway-based non-life insurer NEMI Forsikring ASA on CreditWatch with negative implications. S&P said the CreditWatch placement reflects its “concerns over the increasing levels of debt leverage in the parent company, Iceland-based investment holding company FL Group (not rated).” S&P also explained that “uncertainty regarding FL’s ability to service its debt obligations could have consequences for the capitalization of TM and NEMI.”

Standard & Poor’s Ratings Services has raised its counterparty credit rating on Aveta Inc. to ‘CCC+’ from ‘CCC’. S&P also raised its senior secured debt ratings on MMM Holdings Inc. (MMM) and NAMM Holdings Inc. (NAMM) to ‘CCC+’ from ‘CCC’. The recovery ratings assigned to the credit facility issued through MMM and NAMM remained unchanged at ‘4’. Debt outstanding through March 31, 2008 consisted of a $455.6 million remaining on the term loan due August 2011 and a $20 million revolver due August 2012. The outlook is positive. Credit analyst Joseph Marinucci explained: “The upgrade reflects Aveta’s improving earnings and cash flow profile, which has been driven mainly by core operational fixes related to medical management and contracting initiatives implemented by the new management team. Aveta is better positioned to sustain and potentially build upon its already established competitive position in Puerto Rico.” Furthermore, the company’s liquidity position and financial flexibility are now somewhat less constrained since Aveta is fully compliant with all financial covenants. S&P said the “positive outlook reflects our expectation for sustained business and financial profile development commensurate progress achieved throughout the second half of 2007 and first-quarter 2008. It also reflects our expectation for enhanced debt service capacity and potential for improved financial flexibility by year-end 2008, inclusive of sustained covenant compliance.”

A.M. Best Co. has assigned a financial strength rating of ‘A-‘ (Excellent) and an issuer credit rating of “a-” to Australia’s Ansvar Insurance Limited, both with stable outlooks. “The ratings reflect Ansvar’s adequate stand-alone risk-adjusted capitalization and conservative investment philosophy,” Best noted. “The ratings also recognize the company’s niche focus in the faith, education, care and charity sectors, as well as its unique distribution strategy. Ansvar’s risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR), is commensurate with its assigned rating, although
the BCAR has weakened over the past financial year.”

Standard & Poor’s Ratings Services has revised its outlook on Norway-based marine mutual insurer Norwegian Hull Club (NHC) to negative from stable. S&P also affirmed its ‘A’ long-term counterparty credit and insurer financial strength ratings on the club.
“The outlook revision reflects the sharp deterioration in NHC’s operating performance, which has, in turn, weakened its historically very strong capitalization,” explained credit analyst Ali Karakuyu. S&P said its “ratings reflect the club’s strong but weakened capitalization, strong competitive position, and strong financial flexibility (defined as the ability to source capital relative to requirements). These positive factors are partly offset by the sharp deterioration in operating performance in 2007 and first-quarter 2008 and the club’s concentration on an insurance class where claims size and frequency are unpredictable.” Karakuyu added: “We expect that NHC’s operating performance, and consequently, capitalization, will not improve in 2008. If NHC’s capitalization continues to deteriorate we may take further negative action.”

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