A.M. Best Affirms ‘A-‘ Rating of Corifrance

August 1, 2003

A.M. Best Co. has affirmed the A- (Excellent) financial strength rating of Corifrance (France). The rating reflects Corifrance’s excellent capitalization and improving operating performance. An offsetting factor relates to the company’s limited market profile. The rating outlook remains stable.

A.M. Best Co. has affirmed the A- (Excellent) financial strength rating of Corifrance (France). The rating reflects Corifrance’s excellent capitalization and improving operating performance. An offsetting factor relates to the company’s limited market profile. The rating outlook remains stable.

Excellent capitalization – Corifrance maintains an excellent level of capitalization as measured by A.M. Best’s risk-adjusted capital model, despite strong growth in 2002. In addition, Corifrance’s balance sheet is protected through the existence of a stop loss agreement with its ultimate parent company, Markel Corporation, which provides for the payment of losses over an aggregate ratio of 120 percent up to a further 30 percent of net earned premiums.

Improving operating performance – In 2002 Corifrance reported strong growth in both gross and net premiums – 42.0 percent and 48.1 percent respectively compared to 13.4 percent and 22.0 percent respectively for 2001 – benefiting primarily from the favourable rate environment. The company’s underwriting performance, while still negative, was a substantial improvement on the EUR 1.2 million (approximately USD 1.1 million) loss reported in 2001, at EUR 0.4 million (approximately USD 0.4 million). The good investment return of 5.3 percent as compared to 6.5 percent for 2001 enabled the achievement of a bottom line profit and positive return on equity of 4.0 percent as compared to 1.8 percent for 2001. A return to underwriting profitability is forecast by A.M. Best for 2003.

Limited Market Profile – Corifrance continues to benefit from its long-term relationships with French and foreign primary insurers and its involvement in the various pooling arrangements in France, which account for almost one-third of total premiums. It has successfully developed an extensive worldwide underwriting network – Corifrance has a diversified client base of 300 primary insurers and brokers – even if its size does not allow the company to influence significantly rates, terms and conditions in the broker market.

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