A.M. Best Affirms Rating of Alliance International Reinsurance Public Company Limited; Assigns Issuer Credit Rating

Business Wire, July 6, 2005

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B (Very Good) and assigned an issuer credit rating of "bbb" to Alliance International Reinsurance Public Company Limited (Alliance Re) (Cyprus). The outlook for both ratings is stable.

The ratings reflect Alliance Re's strong capitalisation and good business profile. An offsetting factor is the high expense ratio undermining the technical performance.

A.M. Best believes Alliance Re is likely to maintain a strong risk-adjusted capitalisation with capital and surplus expected to grow steadily over the next two years, largely as a result of improving retained earnings. Further diversification into the Middle East region, where significant reinsurance opportunities are projected to arise in the coming few years, is expected to have a positive impact in stabilising Alliance Re's premium income in 2006 following the 12% decline seen in 2004 (mainly driven by exchange rate movements) and maintaining its good business profile. The company's focus on the Middle Eastern reinsurance market is likely to increase the proportion of facultative business in its portfolio. In 2004, gross written premiums under the treaty programme accounted for approximately 86%, of which 48% were on a non-proportional basis.

A.M. Best believes that Alliance Re's expense ratio will remain relatively high at approximately 40% and is likely to impede improvement of the technical performance over the next two years, with the company's profits becoming increasingly reliant on the investment income. The company's good claims experience is reflected by an estimated claims ratio of approximately 60% over the next two years compared to 57% in 2004.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings.> For current Best's Ratings, independent data and analysis on more than 330 reinsurance companies, please visit http://www.ambest.com/reinsurance/.> A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.