Best Affirms Ratings for Munich Re, Royal and Sun

October 8, 2001

A.M. Best Co. has affirmed the A++ ( Superior) and the A+ (Superior) financial strength ratings for Munich Re and Royal & Sun Alliance Group following its review in the aftermath of the terrorist attacks on the U.S.

In affirming its highest rating for Munich Re, Best’s announcement noted its exceptionally strong capitalization, its position as the world’s leading reinsurer, outstanding geographic and business diversification, conservative financial and operational leverage and the underwriting skills and expertise of its management.

Best also reaffirmed the A++(Superior) ratings for all of Munich Re’s main subsidiaries, including American Re-Insurance Co., American Alternative Ins. Co., Princeton Excess & Surplus Lines Ins. Co. and Munich American Reassurance Company, its principal U.S. operations.

The lower rating and the negative outlook given to RSA reflected Best’s concerns about the adequacy of the group’s reserves, particularly with regard to asbestos and environmental (A & E) liabilities in the U.S., loss cost inflation and the group’s inconsistent financial performance, especially in the U.S.

It cited strong capitalization and the increased focus RSA is putting on its core markets along with a well-diversified portfolio and anticipated premium increases as positive factors. Best indicated that RSA’s preliminary estimated losses from the WTC disaster of £150 million ($220 million) would not have “a material impact on the group’s financial strength.”|”best, affirms, ratings, munich, re,, royal, sun

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