S&P Withdraws Emerson Re Loan Rating; Other Ratings Unaffected

February 3, 2009

Standard & Poor’s Ratings Services announced that its “ratings on Emerson Re Ltd.’s three bank loans are unaffected by CIG Reinsurance Ltd. and New Castle Re Ltd.’s (collectively the cedents) decision to cease the underwriting of new or renewal business.”

S&P said the “companies have provided notice to Emerson Re that a termination event has occurred pursuant to Section 17.2(a) of their reinsurance agreement with Emerson Re.”

S&P also withdrew its ‘BB’ bank loan rating on Emerson Re’s series D bank loan, noting that it had been repaid in full on Jan. 22, 2009.

“Emerson is a limited-life, special-purpose Class B reinsurance company domiciled in the Cayman Islands, established specifically to provide aggregate excess-of-loss reinsurance protection to CIG Re and New Castle Re Ltd.,” S&P stated.

“Such a termination event under the reinsurance agreement with Emerson Re would constitute a default under the terms of the credit agreement,” explained credit analyst James Brender. “Now, the lenders must decide whether to declare Emerson Re in default of the credit agreements or to pursue a different course of action.”

S&P added that “each bank loan has a separate credit agreement and trust account. Therefore, the lenders funding each bank loan will separately decide whether to declare the loan in default.”

Source: Standard & Poor’s – www.standardandpoors.com

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