S&P Lowers Scandinavian Re Ratings to ‘BBB’

February 15, 2002

Standard & Poor’s announced that it has lowered its counterparty credit and financial strength ratings on Scandinavian Reinsurance Co. Ltd. (Scan Re) to triple-‘B’-minus from single-‘A’-plus and placed them on CreditWatch with negative implications.

S&P also placed its single-‘A’-plus counterparty credit and financial strength ratings on Sirius International Insurance Corp. on CreditWatch with negative implications.

The rating action was taken as a result of significant insurance losses of US$138 million relating to Sirius and Scan Re by their ultimate parent, ABB Ltd. and following Scan Re’s decision to cease underwriting new business and not renew existing business. After discussions with management S&P concluded that “Scan Re is no longer of strategic importance to Sirius.”

S&P’s statement noted that “Sirius is committed to ensuring that the liabilities of Scan Re are met in full. Preliminary financial results for Scan Re for year-end 2001 are significantly below expectations for the second consecutive year, and Standard & Poor’s believes the level of capital adequacy has declined.”

It also “reviewed a satisfactory third-party certification of loss reserve adequacy as of year-end 2001,” but indicated that “Sirius’s CreditWatch Negative status is due to concerns about the loss of business position due to the discontinuation of Scan Re’s operations, significant losses caused by Scan Re and the World Trade Center disaster, and uncertainty about the future role of Sirius under the direction of ABB Financial Services AB.”

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