Best Downgrades Tryg-Baltica; Comments on Acquisition by Sirius International

October 8, 2004

A.M. Best Co. announced that it has downgraded the financial strength rating to “B++” (Very Good) from “A-” (Excellent) of Tryg-Baltica Insurance, International Insurance Company A/S (TBI) (Denmark) and has placed the rating under review with negative implications.

The decision follows the announcement that TBI’s parent company, Tryg Forsikring A/S (Denmark) (a Tryg Vesta Group company), has agreed to sell the company to Sweden’s Sirius International Insurance Corporation, and that it will be placed into run off following completion of the sale.

In a separate statement Best said that Sirius’ financial strength rating of “A” (Excellent) is unaffected by the decision to acquire TBI. Best also indicated that it is “discussing the implications of the sale with the management of TBI and Sirius and anticipates resolving the under review status of the rating once the sale agreement is closed (anticipated before the end of October).”

The rating agency noted: “Sirius is acquiring TBI at a discount to its net asset value and is likely to realize some economic benefit from the transaction; however, given the modest size of TBI (USD 177 million total assets in 2003), A.M. Best does not expect the acquisition to materially enhance Sirius’ earnings profile or strategic positioning in the Nordic region.

“Post-acquisition, Sirius intends to place TBI into run off and will selectively renew the in-force portfolio on its own paper.

“Sirius will assume no exposure to the run-off business of TBI’s former subsidiary in the United Kingdom, Chevanstell Ltd., which will remain within the Tryg Vesta Group following the transaction.”

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