Clarendon National FSR Rating Lowered To ‘BBB+’

March 7, 2006

Standard & Poor’s Ratings Services lowered its counterparty credit and financial strength ratings on Clarendon National Insurance Co. and its wholly owned subsidiary, Clarendon America Insurance Co., to ‘BBB+’ from ‘A+’. The outlook is negative.

Both of these companies are ultimately owned by German-based reinsurer Hannover Rueckversicherung-AG.

“We lowered the ratings on Clarendon because although Clarendon still benefits from parental support, it no longer meets Standard & Poor’s criteria to be considered strategically important to Hannover Re,” said Standard & Poor’s credit analyst Siddhartha Ghosh.

Hannover Re is restructuring its U.S. primary insurance business. All specialty business is to be transferred to the newly established Praetorian Financial Group Inc. (PFG). Clarendon Insurance Group Inc., which had previously been responsible for these activities, will concentrate on the professional and proactive management of about 200 terminated programs as well as existing commodity business that falls outside of PFG’s focus.

The outlook on Clarendon is primarily based on uncertainties surrounding its reinsurance recoverables.

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