A.M. Best Affirms A Excellent Rating Of London Life & General Reinsurance Co.

OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 13, 1999--

A.M. Best Co. today affirmed its A (Excellent) rating of London Life & General Reinsurance Co. Ltd., Dublin, Ireland.

The rating reflects the company's strategic position in the London Reinsurance Group, whose parent--London Insurance Group--was purchased by the Great-West Life Assurance Co. in 1997. It also reflects the company's excellent financial performance, strong capital base, favourable liquidity position and conservative investment strategy. The company's strategic importance to the London Reinsurance Group--and, ultimately, Great-West--recently was confirmed following a review of the group and its subsidiaries. The review concluded that the group holds a strong strategic position in a number of niche reinsurance and retrocession markets, with the potential to grow in most of its key business areas.

The company was incorporated in 1991 to provide life, traditional and finite property and casualty, and accident and health reinsurance products to the London, Continental European and Asian markets. The company is responsible for all London Reinsurance Group business outside the Americas and Bermuda. Premium volume for 1998 was Canadian $97.7 million. It also has reinsurance investments through the capital markets, Lloyd's corporate capital vehicles and special purpose vehicles. The company has the added advantage of operating in the International Financial Services Centre in Dublin.

In difficult trading conditions, the company returned a post-tax profit of Canadian $10.9 million, compared with Canadian $10.6 million in 1997. Underwriting income was affected by poor results in some of the Lloyd's syndicates supported by the company. As part of the company's ongoing growth and development, it is seeking to change the mix of business to include longer-tail business and enter new niche areas. Over the past five years, the company has averaged an 8.5% return on equity, although A.M. Best believes its 1999 result will be lower than in previous years. The company's strong capital base continues to be an advantage; however, A.M. Best believes the modest size of the capital base (policyholders surplus of Canadian $148.3 million) may have some negative implications from a marketing perspective. The company's loss reserve practices tend to be conservative and vary by line of business. Offsetting these positive rating factors is the competitive trading environment in all of the classes in which the company operates. To counteract this competition, A.M. Best believes the company needs to increase its ability to offer greater capacity for its U.S. exposed business. A.M. Best believes the company, backed by Great West, is in a position to increase its capabilities as opportunities arise.

A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com.