Best Downgrades AXA Re Property/Casualty

September 17, 2004

A.M. Best Co. has downgraded the financial strength rating to “B++” (Very Good) from “A-” (Excellent) of AXA Re Property and Casualty Insurance Company (New York, N.Y.). The rating outlook remains negative.

A.M. Best Co. has downgraded the financial strength rating to “B++” (Very Good) from “A-” (Excellent) of AXA Re Property and Casualty Insurance Company (New York, N.Y.). The rating outlook remains negative.

This rating action reflects the deterioration of AXA Re P/C’s capitalization due to losses from Hurricanes Charley, Frances and Ivan. Although the company has strong reinsurance protection in place, it will still experience a significant decline in surplus from the cumulative net impact of these losses ($39 million as a maximum). As a result, its risk-adjusted capitalization is no longer supportive of an “A-” (Excellent) rating.

At the beginning of 2003, the AXA Re Group (Paris, France) announced a strategic shift in its U.S. operations involving the phasing out of its U.S. program business segment. AXA Re P/C was the primary carrier of this activity. Though the company’s exposure to natural events is diminishing with this exit strategy, some exposure remains. The ultimate losses from the 2004 hurricane activity are also uncertain; therefore, the rating outlook remains negative.

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