A.M. Best Places Ratings of Hannover Re, Subsidiaries Under Review

April 14, 2003

A.M. Best Co. has placed the financial strength ratings of A+ (Superior) of Hannover Rueckversicherungs-AG (Hannover Re) and its core subsidiaries under review with negative implications. (See list below.) At the same time, the “a” rating on the USD 400 million subordinated debt issued by Hannover Finance Inc. and guaranteed by Hannover Re and the “a” rating on the EUR 350 million subordinated debt issued by Hannover Finance (Luxembourg) S.A. and guaranteed by Hannover Re have been placed under review with negative implications.

In addition, A.M. Best has placed the financial strength rating of A (Excellent) of Hannover Life Reassurance Company of America (Orlando, FL) under review with negative implications.

The under review status reflects A.M. Best’s assessment of Hannover Re’s current and prospective consolidated risk-adjusted capitalisation. Hannover Re’s property/casualty gross premiums grew by a strong 21.9 percent in 2002, and A.M. Best expects further growth in 2003, albeit on a smaller scale. Although consolidated shareholders’ equity (including minority interest) has increased due to retained earnings at year-end 2002, A.M. Best believes that further funds will be required to sustain risk-adjusted capital levels in 2003. Hannover Re has already made extensive use of capital market instruments for which A.M. Best has already given its maximum equity credit. However, in Nov. 2002 Hannover Re’s shareholders gave permission to raise equity if necessary.

The current rating recognises Hannover Re’s significantly improved underwriting performance in property/casualty and programme business in 2002. The in-force value of its life/health portfolio increased by an excellent 15.1 percent in 2002.

A.M. Best intends to resolve the under review status shortly.

The financial strength ratings of A+ (Superior) of the following core subsidiaries of Hannover Re have been placed under review with negative implications:

— E+S Rueckversicherungs-AG
— Hannover Reinsurance (Ireland) Limited
— E+S Reinsurance (Ireland) Ltd
— Insurance Corporation of Hannover
— Hannover Life Reassurance (Ireland) Ltd

The following debt ratings have been placed under review with negative implications:

Hannover Finance Inc.–

“a” rating on USD 400 million subordinated floating rate notes, due March 2029 (guaranteed by Hannover Re)
Hannover Finance (Luxembourg) S.A.–

“a” rating on EUR 350 million fixed/floating rate subordinated debentures, due March 2031 (guaranteed by Hannover Re)

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