A.M. Best Affirms Ratings of Alliance International Reinsurance Public Company Limited.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of B++ (Very Good) and the issuer credit rating (ICR) of "bbb" for Alliance International Reinsurance Public Company Limited (Alliance Re) (Cyprus). The outlook for both ratings is stable.

The ratings reflect Alliance Re's solid prospective capitalisation and improving business profile. An offsetting factor is the high expense ratio, although some improvements are expected in the medium term.

A.M. Best believes that Alliance Re's risk-adjusted capital position is likely to be solid and supportive of the projected net premium growth in 2006 and 2007, while the capital base is expected to improve at approximately 3-5% each year.

In A.M. Best's view, Alliance Re's business profile is improving as the company diversifies its sources of premium income through new strategic partnerships established in 2005 and 2006, which are likely to account for approximately 10-15% of gross premium income over the next two years.

In A.M. Best's opinion, Alliance Re's underwriting performance is likely to improve in 2006 and 2007 with a prospective very good combined ratio of approximately 95-98%, compared to 100.8% in 2005. However, in A.M. Best's view, the expense ratio is likely to remain high at approximately 35% in 2007 despite an expected decrease from the very high level of 39.2% in 2005. This improvement is projected to be driven by stable forecasted operating costs while net premium income is likely to grow by a good 10%-15%.

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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.