S&P Rates Hannover Re Africa “BBB”

March 26, 2004

Standard & Poor’s Ratings Services announced that it has assigned a “BBB-” long-term counterparty credit and insurer financial strength ratings to Hannover Reinsurance Africa Ltd. (Hannover Re Africa) with a stable outlook.

“Hannover Re Africa is one of the major reinsurers in South Africa, although it is small in global terms,” said S&P. “The company has been in transition since the beginning of 2002, when the existing management team took charge and the underwriting and investment strategy was refocused. The company is now closely aligned with the strategic objectives of the Hannover Re group (main entities are rated AA-/Negative/–).”

“The ratings reflect Hannover Re Africa’s good niche business position, clear strategy, and good prospective operating performance. The company’s membership of the Hannover Re group is also a positive factor for the ratings,” stated S&P credit analyst Simon Marshall. “Offsetting these strengths are Hannover Re Africa’s marginal capitalization and relatively new (and therefore unproven) management team.”

The rating agency indicated that the “stable outlook is driven by the expectation that operating performance will improve significantly from 2004 onward. The combined ratio is expected to be at or below 100 percent in 2004 and 2005. Furthermore, the influence of investment and currency exchange losses is expected to be negligible. Standard & Poor’s expects Hannover Re Africa to continue to benefit from an extensive reinsurance program provided by the Hannover Re group. Risk-based capital adequacy is expected to improve to good in 2004.”

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