A.M. Best Affirms Rating of QBE Re Group – U.S.

November 28, 2003

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) of QBE Re Group – U.S. (QBE) (New York, N.Y.). This rating applies to QBE Reinsurance Corporation (Philadelphia) and its subsidiaries, QBE Insurance Corporation (Philadelphia) and QBE Specialty Insurance Company (Bismarck, N.D.). The rating outlook is stable.

The rating reflects the group’s strong risk-adjusted capital position, enhanced underwriting controls and improved operating performance over the past two years. Furthermore, the rating reflects the group’s diversified risk portfolio and ability to generate business opportunities through its niche market strategy.

The group is the U.S. operating platform within QBE Insurance Group Limited, which is one of Australia’s largest insurance/reinsurance organizations. A.M. Best’s view of the U.S. group’s capital considers $75 million of contributions that will be received from its parent, prior to the end of 2003.

Offsetting these strengths is the greater uncertainty with respect to QBE’s more aggressive recent growth in gross and net premium volume within specialty classes of business, underwritten through managing general agents (MGAs).

Mitigating this concern is the group’s commitment to maintaining pricing adequacy and prudent underwriting controls over its MGA produced business. Additionally, management has limited the group’s net exposure from a single catastrophic event to $12 million, which is less than 5 percent of policyholders’ surplus.

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