S&P: OIL’s $1.2 Billion Loss Will Not Affect Ratings

January 11, 2005

Standard & Poor’s Ratings Services has issued a bulletin indicating that the recently announced $1.2 billion of incurred losses in 2004 for Oil Insurance Ltd. – currently rated “A+”/Negative; debt rating “A-1” – “will not affect its ratings on the company at the present time.”

S&P said that although the losses are significant and will adversely affect OIL’s 2004 financial results, “OIL’s policyholders (who are also the company’s shareholders) are contractually obligated through the shareholders’ agreement to repay the 2004 incurred losses between 2005-2009.”

S&P also said it “believes that OIL’s business model (i.e., retrospective rating plan) is sound and is a strength of the rating.” It added, however, that “OIL is susceptible to volatility of operating performance, ” and said it would “continue to monitor the company for any future significant developments that could affect the ratings.”

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