S&P Lowers If PC Ratings to ‘A-‘

February 13, 2002

Standard & Poor’s announced that it has lowered its long-term counterparty credit and insurer financial strength ratings on the operating entities of Scandinavia’s If P&C Group to single-‘A’-minus from single-‘A’, with a stable outlook.

The group includes Sweden-based If Property & Casualty Insurance Ltd. (publ), Finland-based If P&C Insurance Co. Ltd. (formerly Sampo Insurance Co. Ltd.) and If Industrial Insurance Co. Ltd. (formerly Sampo Industrial Insurance Co. Ltd.).

“The rating actions are based on If’s disappointing results for 2001, with a combined ratio of 115.1%. This follows several years of improving but unimpressive earnings since the group’s foundation in 1999. This combined ratio is expected to be slightly better if adjusted to include Sampo PLC’s nonlife business for the full year,” said S&P’s announcement.

“The 2001 performance reflects, in particular, a Swedish krona (Skr) 485 million ($46 million) reserve strengthening, which was announced in November 2001, and a significant increase in large claims severity during 2001, especially during the fourth quarter. Although this reserve strengthening can be regarded as exceptional, the underlying results represent an underperformance relative to Standard & Poor’s previous expectation for the 2001 combined ratio of 108% and a reversal of the recent positive trend,” it added.

Commenting on the “stable outlook,” S&P stated that, “If’s business position and capital adequacy will remain strong. As premium rates harden further in 2002, a significantly improved performance with a combined ratio consistently below 110% is expected during the next few years.”|”sp, lowers, if, pc, ratings, ‘a-‘

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