Odyssey Re Affirmed

December 1, 2003

A.M. Best Co. has affirmed the financial strength ratings of Odyssey Reinsurance Group based in Wilmington, Del., of an “A” (excellent). In addition, Best has assigned the financial strength rating of “A” (excellent) to Hudson Specialty Insurance Company in New York, a newly purchased reinsured affiliate of Odyssey.

The affirmation of Odyssey’s ratings reflects excellent and improving stand-alone capitalization, disciplined historical underwriting performance, strong and sustained earnings momentum and its position in the global reinsurance market. These attributes are supported by Odyssey’s diversified geographic client base, combined with its broad product capability and an opportunistic business philosophy.

During the past five years, Odyssey has reported more favorable underwriting results compared with Best’s professional reinsurer’s composite average. Together with an astute investment strategy as well as access to the capital markets, Odyssey’s risk-adjusted capitalization has been supportive of its significant growth in the last three years. Growth has occurred from robust opportunities emanating from a hard market, market dislocations and capacity shortages in specific global regions. Estimated 2003 projections indicate financial leverage will remain at approximately 20 percent at the holding company level, supported by fixed charge and cash coverage ratios in the high single digit range, which are well within the acceptable range of its rating category.

Offsetting these positive attributes is Odyssey’s elevated operating leverage relative to its peers and the potential for adverse reserve development emerging from its older long-tail casualty reserves and more recently, from its aggressive growth in new business. Best expects the company to temper and manage its operating leverage at lower levels for the 2004 accident year as it continues to augment its capital position from both internal and external sources. Best is maintaining a negative rating outlook.

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