Best Affirms IPCRe Group’s ‘A+’ Rating

December 17, 2003

A.M. Best Co. announced that it has affirmed its A+ (Superior) financial strength ratings of the Bermuda-based IPCRe Group and its affiliated companies, with a stable outlook.

“The rating reflects IPCRe’s superior risk-adjusted capitalization, excellent historical earnings and well established market presence within the global property catastrophe reinsurance market,” said Best. “The rating also acknowledges IPCRe’s highly experienced management team, prudent risk management strategies and customer-oriented focus. Due to its strong exposure management, the company has withstood volatility in operating performance, stemming from high severity catastrophic activity from 1998 through 2001. More recently, IPCRe’s performance has been superior, benefiting from a lack of major catastrophic events, improved reinsurance pricing, tighter contract terms and continued conservative risk management.”

The bulletin noted that “To minimize impacts from catastrophic events, IPCRe management carefully monitors aggregate accumulations with the maximum allowable exposure in any single geographic zone limited to a preset percentage of capital established by its Board of Directors. This capital-based limits approach diversifies the company’s exposure around the world and achieves an optimal spread of risk.”

Best also said that its rating on IPCRe considers the advantages the company “derives through strategic relationships with affiliates of its original sponsor and largest shareholder, American International Group Inc. (AIG). AIG affiliates provide administrative and back office functions in addition to investment portfolio management services.”

Offsetting factors cited by Best included “the increasing availability of reinsurance capacity in the property catastrophe reinsurance market and IPCRe’s concentrated risk profile, which may pressure future operating performance.” The rating agency indicated, however, that “these concerns are mitigated by IPCRe’s unencumbered balance sheet, supported by an investment portfolio with over $1.6 billion of invested assets that are conservatively managed to ensure adequate liquidity and preservation of capital. Furthermore, IPCRe consistently records strong operating cash flows, which supplement the availability of a $200 million revolving credit facility and enhance financial flexibility.”

The A+ (Superior) rating also covers the following operating subsidiaries:
— IPCRe Limited
— IPCRe Europe Limited

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