Ratings: MS Frontier, PARIS RE RISC

July 3, 2008

A.M. Best Co. has assigned a financial strength rating of ‘A’ (Excellent) and an issuer credit rating of “a+” to Bermuda-based MS Frontier Reinsurance Ltd. (MS Frontier) with stable outlooks. MS Frontier is a wholly owned subsidiary of Mitsui Sumitomo Insurance Company, Limited (MSI), which is the main trading subsidiary of Japan’s Mitsui Sumitomo Insurance Group Holdings, Inc. (MSIG). “MS Frontier serves as one of MSIG’s strategic insurance vehicles designed to achieve the group’s geographical portfolio optimization and risk diversification,” Best explained. “MS Frontier is one of MSIG’s largest equity investments outside of Japan. MS Frontier maintains a conservative business model and uses the global recognition and the balance sheet strength of its parent for competitive advantage. The ratings assigned to MS Frontier reflect the significant financial support and the reinsurance cover (subject to certain conditions) it receives from MSI, as well as its excellent level of risk-adjusted capitalization. Under a credit support agreement, MSI agrees to own and hold all of MS Frontier’s outstanding shares, maintain a positive tangible net worth and unconditionally and irrevocably guarantee all of its obligations. Furthermore, both companies have a facultative obligatory reinsurance facility under which MSI agrees to reinsure all new exposures when MS Frontier’s annual aggregate probable maximum loss amount, with a specified non-exceedance probability, exceeds a specific level of total adjusted stockholders’ equity.”

Standard & Poor’s Ratings Services said today it assigned its ‘A-‘ long-term insurer financial strength rating to Bermuda-based entity PARIS RE RISC Ltd. with a stable outlook is stable. S&P said: “The rating reflects a qualifying guarantee provided to PARIS RE RISC by its parent PARIS RE SA (PARIS RE (France); A-/Stable/–).” Credit analyst Peter Grant added: “Owing to the existence of the guarantee, the ratings on these two entities are expected to move in tandem going forward.” S&P indicated that the “ratings on the PARIS RE Group (PARIS RE or “the group”) reflect its clearly articulated strategy and track record of successful execution since 2003, when the current management team assumed leadership. The ratings also reflect the group’s strong capitalization and strong financial flexibility. The ratings are constrained, however, by uncertainty surrounding the group’s ability to maintain its recent strong earnings momentum in a more challenging market and its continuing, albeit diminished, earnings volatility. The stable outlook on PARIS RE RISC reflects the stable outlook on its guarantor and parent, PARIS RE (France).”

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