A.M Best Assigns Rating to Ajax Re Limited's Principal At-Risk Variable Rate Notes.OLDWICK, N.J. -- A.M. Best Co. has assigned a debt rating of "b+" to the $100 million Series 1, Class A principal at-risk variable rate notes (the notes) due May 2009, issued by Ajax Re Limited (the issuer), a newly created special purpose Cayman Islands Cayman Islands (kā`mən), British dependency (2005 est. pop. 44,300), 100 sq mi (259 sq km), comprising three islands in the West Indies. exempted, Class B insurer. The notes are the first series issued under the issuer's $1 billion principal at-risk variable rate note program. The rating outlook is stable. The primary business purpose for the creation of the issuer is for the issuance of the notes and the service and performance of various agreements entered into, including the reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. agreement between the issuer and Aspen Insurance Limited (Bermuda) and Aspen Insurance UK Limited (collectively, Aspen); the swap agreement between the issuer and Lehman Brothers Lehman Brothers Holdings Inc. (NYSE: LEH), founded in 1850, is a diversified, global financial services firm. It is a participant in investment banking, equity and fixed income sales, research and trading, investment management, private equity, and private banking. Special Financing Inc. (the swap counterparty); and other covenants. Under the reinsurance agreement, the issuer will provide Aspen with up to $100 million of aggregate indemnity protection over a 20.5-month period beginning August 18, 2007, when certain losses from individual earthquakes in California meet specific reinsurance attachment and exhaustion points. The reinsurance attachment and exhaustion points will be re-calibrated on April 15, 2008. Proceeds from the issuance of the notes will be deposited into a collateral trust account and will be available to pay amounts owed by the issuer to Aspen under the reinsurance agreement. This includes amounts owed to the swap counterparty, loss payments required to be made by the issuer under the reinsurance agreement and payments in respect of such notes under an indenture between the issuer and The Bank of New York The Bank of New York, abbrieviated to BNY, was a global financial services company that existed until its merger with the Mellon Financial Corporation on July 2, 2007.[1] The bank now continues under the new name of The Bank of New York Mellon Corporation. , the indenture trustee. All funds in the collateral trust account will be invested as per the investment guidelines set in the indenture, which governs the selection of the directed investment(s) to be acquired. The notes have limited recourse Limited recourse A term describing a type of loan in which the lender has limited or no claim against the parent company if the collateral is insufficient to repay the debt. See:Nonrecourse. to certain assets of the issuer and are without recourse A phrase used by an endorser (a signer other than the original maker) of a negotiable instrument (for example, a check or promissory note) to mean that if payment of the instrument is refused, the endorser will not be responsible. to Aspen. The assigned rating represents A.M. Best's opinion as to the issuer's ability to meet its financial obligations to security holders when due. The rating of the notes takes into consideration a multitude of factors including the modeled probability of attachment (i.e., the first dollar of loss) of 2.2% (per annum Per annum Yearly. ) as provided by EQECAT, the modeling firm and calculation agent involved in the transaction; a review of Aspen's underwriting policies and risk management; and a review of the structure and the legal documentation surrounding the structure. In addition, the rating takes into consideration an assessment of (1) Aspen's ability, under the reinsurance agreement, to make periodic payments (reinsurance premium, swap spread Swap Spread 1. The difference between the negotiated and fixed rate of a swap. The spread is determined by characteristics of market supply and creditor worthiness. 2. and expense reimbursements) and, (2) the swap counterparty's ability to meet its obligations under the swap agreement to the issuer. Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. industries, including the banking and insurance sectors. For more information, visit www.ambest.com. |
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