Ratings Recap: QBE (US); HSBC; Genworth; State Farm; Mystic Re II

June 7, 2007

A.M. Best Co. has affirmed the financial strength rating (FSR) of “A” (Excellent) and the issuer credit ratings (ICR) of “a” of New York-based QBE Re Group U.S. and its members. Best also removed the ratings from under review with negative implications and assigned a stable outlook. Following the completed acquisition of Winterthur U.S. (rebranded as QBE Regional Insurance Group), Best upgraded the subsidiary’s FSR to “A” (Excellent) from “A-” (Excellent) and the ICRs to “a” from “a-” and assigned a stable outlook. The ratings are no longer under review. Concerning QBE America’s other acquisition, Delaware-based Praetorian Financial Group, Best said it would maintain the FSR of “A”- (Excellent) and ICRs of “a-“. They will “remain under review with developing implications pending further discussions with management regarding capital allocation plans,” said Best.

A.M. Best Co. has affirmed the financial strength rating of “A+” (Superior) and issuer credit ratings (ICR) of “aa-” to three companies that represent the primary U.S. operating entities of HSBC Insurance, a unit of HSBC Finance Corporation. These are: Household Life Insurance Company, based in Detroit, Mich. and its wholly owned subsidiary, First Central National Life Insurance Company of New York, as well as the property and casualty affiliate, HSBC Insurance Company of Delaware. The companies “represent the primary U.S. insurance operating entities of HSBC Insurance,” Best noted. All the ratings have a stable outlook

Standard & Poor’s Ratings Services said today that it assigned its “A” senior unsecured debt rating to Genworth Financial Inc.’s $350 million senior unsecured notes due in May of 2012. “The rating is based on Genworth’s very strong competitive position; well-diversified and growing businesses in life insurance, global mortgage, and payment protection insurance; long-term care insurance; annuities; retirement income; and managed money,” explained S&P credit analyst Kevin Ahern, noting that as of March 31, 2007, Genworth had about $105 billion in assets.

Fitch Ratings has affirmed its “AA+” insurer financial strength ratings on State Farm Mutual Automobile Insurance Company, State Farm Life Insurance Company and State Farm Life and Accident Assurance Company with stable rating outlooks. Fitch said “the ratings of State Farm favorably reflect its top-tier franchise position, highly productive career agency distribution force, strong capital position from both an absolute dollar and risk-adjusted basis, and diversification across products and geography. Balanced against these strengths are a history of below industry-average underwriting results, volatility in capital from a large investment allocation to equity securities, and the ongoing litigation related to Hurricane Katrina.”

Standard & Poor’s Ratings Services has assigned its “B+” senior secured debt rating to Mystic Re II Ltd.’s $150 million Class A Series 2007-1 principal at-risk variable rate notes, the first to be issued under a new program. “The proceeds from the issuance of the notes will provide Liberty Mutual Insurance Co. (A/Stable/A-1) with a source of index based coverage for hurricanes in the covered area (Florida and all states that border the Atlantic from Maryland to Maine, plus Vermont and Washington D.C.) on a per occurrence basis over a four-year period,” S&P explained. “This is the fourth hurricane-linked catastrophe bond for which Liberty Mutual was the sponsor, the first three being issued in 2006 under the Mystic Re Ltd. program. AIR Worldwide Corp.’s models were used to determine the probability of attachment and the analysis of the deal’s structure.

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