A.M. Best Affirms Ratings of Brit Insurance Limited and Brit Insurance Holdings PLC.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating (ICR) of "a" of Brit Insurance Limited (BIL) (United Kingdom). At the same time, A.M Best has affirmed the ICR of "bbb" of Brit Insurance Holdings PLC (BIH) (United Kingdom) and the ratings of "bbb-"on the USD 15 million floating rate subordinated notes, "bbb-"on the GBP 20 million unsecured subordinated loan stock and "bbb-" on the GBP 150 million fixed rate subordinated notes issued by BIH. The outlook for all ratings remains stable.

A.M. Best believes that BIL is likely to maintain excellent risk-adjusted capitalisation, supported by solid retained earnings. Additionally, BIL benefits from the financial flexibility of the parent company, BIH, which has demonstrated its ability to raise additional capital.

In 2008, A.M. Best anticipates good post-tax earnings in excess of the GBP 33 million reported in 2007, although results are likely to remain dependent upon the company's investment earnings. The combined ratio is expected to be comparable to that achieved last year (102.7%). Performance is likely to be supported by the absence of large loss experience that affected the 2007 results, BIL's prudent reserves and the benefit of its reinsurance programme, which has been enhanced by the group's use of the newly formed and independently owned protected cell company, Rockhampton Insurance PCC Limited (Rockhampton). However, earnings are also likely to be affected by declining rates across BIL's core business lines written within its global markets and reinsurance business units. The balance of BIL's account, written within its UK regional business unit, is also likely to continue to be subject to intense competition, although some signs of a stabilisation in rates have become apparent for certain business lines. Operating expenses are likely to increase as BIL continues to expand, particularly in the UK regional market, driven by implementation of enhancements to the company's underwriting and distribution capability and improvement to its IT infrastructure.

In A.M. Best's opinion, BIL maintains an excellent market profile, enhanced by its well-diversified book of business in terms of product range and geographical spread. The company continues to strengthen its brand within the UK through growth of its distribution network, which includes the expansion of its e-trading capabilities. In 2008, A.M. Best anticipates a small increase in gross premium income from the GBP 616 million written in 2007. Some improvement in the opportunities available in the UK regional market is likely to be partly offset by a reduction in reinsurance business.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.