OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit rating (ICR) of "a-" of PARIS RE (France) and the other rated operating subsidiaries of PARIS RE Holdings Limited (Switzerland) (PRH), the ultimate parent company of the group. At the same time, A.M. Best has affirmed the ICR of "bbb-" of PRH. The outlook on all ratings remains positive. (See below for a detailed listing of the companies and ratings.)

The ratings of the operating subsidiaries of PRH's reflect the group's strong consolidated risk-adjusted capitalisation, diversified business profile and experienced management team. The positive outlook reflects A.M. Best's view that an upgrade could be considered at a stage when A.M. Best believes that the group's disciplined underwriting strategy appears likely to result in sustained strong performance.

A.M. Best expects PRH's consolidated risk-adjusted capitalisation to continue to be supportive of the ratings in 2009, despite a dividend payout ratio of 100% of 2008 operational results and normal growth in claims reserves. The company's consolidated risk-adjusted capitalisation remained excellent in 2008, supported by the absence of a significant impact from the financial crisis (overall unrealized gain at the end of 2008 of USD 69.8 million). In January 2008, its entire equity portfolio was sold.


Underwriting results are likely to improve in 2009 provided that catastrophe experience remains within expectations. Stability in future performance will be assisted by PRH's risk reduction in facultative (mainly property and energy) business, marine, and credit and surety, although the latter may still be heavily hit by the economic environment in 2009. A.M. Best believes that the company's expense ratio should also improve due to a reduction of the charges related to the company's stock option plan and an anticipated decrease in commissions. The company is also likely to continue to benefit from a strong investment yield in 2009 at approximately 3.5-3.8%, albeit reduced due to the recent drop in interest rates. The company's underwriting performance in 2008 was marginally worse than A.M. Best anticipated (combined ratio of 103% compared to 91.3% in 2006), due to relatively high claims frequency and losses from hurricane Ike and from credit and surety business.

PRH is a medium-sized international company with a well balanced portfolio. Although property treaties remain the largest line of business (43% of gross written premium [GWP] in 2008), the underwriting portfolio is well diversified between Europe and the U.S. The company is expected to write GWP of approximately USD 1.35 billion in 2009, slightly lower than in 2008 (USD1.4 billion) following the reduction of exposure implemented for the 2009 underwriting year. The decline in premiums may be mitigated by an increase in US property catastrophe premiums following June and July 2009 renewals, if rates continue to rise in that segment.

The FSRs of A- (Excellent) and the ICRs of "a-"of the following subsidiaries of PARIS RE Holdings Limited have been affirmed, and the outlook remains positive:

• PARIS RE
• PARIS RE Switzerland A.G.
• PARIS RE America Insurance Company
• PARIS RE Asia Pacific Pte. Ltd.
• CGRM (Compagnie Generale de Reassurance de Monte Carlo)

The ratings of PARIS RE Switzerland reflect its membership of the PARIS RE group. The affirmation of the ratings of PARIS RE America Insurance Company, PARIS RE Asia Pacific Pte. Ltd. and CGRM reflect guarantees from PARIS RE.


For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Co.

Analysts

Fabien Duprez, +(44) 20 7626 6264

fabien.duprez@ambest.com

or

David Drummond, +(44) 20 7626 6264

david.drummond@ambest.com

or

Public Relations

Jim Peavy, +(1) 908 439 2200, ext. 5644

james.peavy@ambest.com

or

Rachelle Morrow, +(1) 908 439 2200, ext. 5378

rachelle.morrow@ambest.com

Source: A.M. Best Co.