Best, Fitch Put Exporters’ Ratings under Review/Negative

November 17, 2008

Both A.M. Best and Fitch Ratings have reacted negatively to the news that the Exporters Group has entered into an agreement to transfer renewal rights to Australia’s QBE Holdings.

Best put its financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of both the Bermuda-based Exporters Insurance Company Ltd. and the UK-based Exporters Insurance Company (Europe) Ltd. under review with negative implications. Best also affirmed the ratings.

Fitch placed its ‘A-‘ Insurer Financial Strength (IFS) ratings on both companies on Rating Watch Negative following the announcement. Fitch also noted that QBE will administer the run-off of Exporters’ and Exporters Europe’s existing portfolio.

Best said the ratings reflected both operations “adequate risk-adjusted capitalization. Exporters Europe also benefits from the implicit support provided by Exporters Bermuda. The ratings also recognize Exporters Europe’s conservative approach to investment management and its strong market position among its growing membership,” said Best. It also expects Exporters Europe’s strong management to pilot the company effectively through global economic expansions and contractions.”

Fitch said the rating watch placement reflects its “belief that Exporters’ status as a run-off company will result in a weakened capital position over time and with limited income sources. Fitch also believes that Exporters remains susceptible to increased investment losses and claims related to credit market volatility, as well as increased reinsurance recoverable risk related to the run-off.”

Fitch said it expects to resolve the Watch status following further analysis of Exporters’ business run-off plans, including claims management, and its ongoing capital position. The acquisition is expected to close by the end of November of this year. Exporters is a Bermuda-domiciled group captive insurance subsidiary of EIC Corporation Ltd. (EIC) that focuses on writing credit and political risk insurance.”

Source: A.M. best – and Fitch Ratings –

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