Best Affirms Evergreen ‘A-‘ Rating; Outlook Positive

September 16, 2004

A.M. Best Co. announced that it has affirmed the “A-” (Excellent) financial strength rating of Bermuda-based Evergreen Reinsurance Company, Ltd. (ERCL), and has revised its outlook on the company to positive from stable.

“This rating reflects ERCL’s excellent capitalization, consistently strong operating performance and its unique role as the primary insurance carrier for its ultimate parent, Evergreen Group,” said Best.

“These positive rating factors are derived from ERCL’s conservative underwriting standards, low cost operating structure and its multiple product line book of business and broad geographic exposure base,” the announcement continued. “Partially offsetting these positive rating factors is the company’s exposure to earthquakes and typhoons in the Asia/Pacific region, though the risk is mitigated by policy sublimits, prudent reinsurance and the wide geographic dispersion of insured assets.”

Best noted that “in addition, management places great emphasis on risk control and carefully monitors its writings in order to avoid a concentration of risk. Due to recent capital contributions, coupled with continued operating excellence and further diversification of the book of business, A.M. Best has revised the rating outlook to positive.”

The rating also reflects “the strong level of commitment on the part of Evergreen Group, whose management incorporates ERCL as an integral component in its overall risk management program,” best continued. “Moreover, ERCL gains from its parent’s global scope and business relationships. These commitments have been developed over the last several years and encompass risks located in a number of countries in East and Southeast Asia. Third-party premium volume had exceeded 63% as of year-end 2003 and is expected to exceed two-thirds of the ERCL book of business by year-end 2005.

“Overall, ERCL benefits from the management experience and market presence of its parent, as well as adherence to a philosophy of providing a stable market for global insurance and reinsurance for the parent and its operating subsidiaries.”

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