S&P Assigns Russia Reinsurer Ratings

October 27, 2005

Standard & Poor’s Ratings Services announced that it has assigned its “B+” long-term counterparty credit and insurer financial strength ratings to Russia-based reinsurer RESO-Re. S&P also assigned its “ruA+” Russia national scale rating to the company. The outlook is positive.

“The ratings on RESO-Re reflect its core status within the RESO-Garantia group,” stated S&P credit analyst Tatiana Grineva. “The ratings on RESO-Re therefore reflect the financial strength characteristics of RESO-Garantia.”

S&P said: “The ratings are based on RESO-Garantia’s high industry risk, over which the group has very little control; aggressive investment strategy, which translates into a weak investment portfolio; and low capitalization by international standards.

“These negative factors are partially mitigated by RESO-Garantia’s strong competitive advantages in the Russian private lines insurance market.”

S&P indicated that the positive outlook reflects its “expectation that RESO-Garantia’s investment profile will become more conservative in line with new Russian regulatory requirements, which will become effective in June 2006. As a result, the ratings may be raised. If the group fails to improve the quality of its investment portfolio, however, the ratings are likely to be affirmed and the outlook revised to stable.

“In addition, Standard & Poor’s expects RESO-Re to maintain its core status within RESO-Garantia, while RESO-Garantia is expected to continue its controlled profitable growth.”

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