A.M. Best Affirms Rating of ACE Insurance S.A.-N.V.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 29, 2002 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A (Excellent) of ACE Insurance S.A.-N.V., Belgium. The rating reflects A.M. Best's view of ACE Insurance S.A.-N.V. (trading as ACE Europe) as a strategically important part of the ACE group. It also considers ACE Europe's excellent capital position, strong business profile in the United Kingdom and Europe and prospective improvement in operating performance. Offsetting these positive factors are ACE Europe's heavy reliance upon outwards 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. and its low level of liquidity. Strategic importance to ACE group--A.M. Best regards ACE Europe as strategically important to the ACE group. For example, ACE Europe is a key part of the ACE group's global strategy in the accident and health market, producing 47% of the group's global income in 2001. Further, the company cedes approximately 45% of outwards reinsurance premiums to ACE group companies. Excellent capitalisation--ACE Europe's capitalisation is consistent with the company's current rating level, according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. A.M. Best's risk-based capital model. This follows two capital injections by the parent company--EUR 60 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 60 million) in June 2002 and EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 35 million (USD 35 million) in August 2002. Financial flexibility is provided by the parent and through the existence of a substantial trust fund to provide further capital should the need arise. Excellent business profile--ACE Europe is considered a leading market participant The term market participant is used in United States constitutional law to describe a U.S. State which is acting as a producer or supplier of a marketable good or service. When a state is acting in such a role, it may permissibly discriminate against non-residents. in the niche business sectors underwritten. The company benefits from the ACE brand and from new business opportunities as a consequence of recent market withdrawals. Improvement in prospective operating performance--A.M. Best expects the company's operating performance to improve in 2002, although an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. is still expected (2001 operating loss of EUR 83 million (USD 83 million)). As a result of enhanced management and underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. controls introduced during 2002, combined with a continuation of current favourable underwriting conditions, A.M. Best expects an operating profit Operating profit (or loss) Revenue from a firm's regular activities less costs and expenses and before income deductions. operating profit See operating income. to be achieved in 2003, subject to normal loss experience. Reliance on outwards reinsurance--ACE Europe operates with a low net retention, which is unlikely to change in the foreseeable future, with 64% of premium ceded in 2001. This has an impact on the company's current liquidity ratio--total investments to total liabilities less shareholders' funds--which was low at 26% at year-end 2001. Although nearly half the premium ceded is to ACE group companies, there remains a material element ceded to third-party reinsurers. Expectations: -- The company will retain its status as strategically important to the ACE group. -- The company will maintain its capital at a level consistent with the current rating. -- ACE group companies will continue to provide a significant proportion of the outwards reinsurance programme. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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