A.M. Best Assigns A++ Rating To Swiss Re and Subsidiaries.

Business Editors

OLDWICK, N.J.--(BUSINESS WIRE)--July 7, 2000

A.M. Best Co. has assigned an A++ (Superior) financial strength rating to Swiss Reinsurance Co., Zurich, Switzerland. The rating also applies to the group's core non-life and life reinsurance and insurance subsidiaries and their substantially reinsured affiliates that operate throughout the Americas, Europe, Africa and Asia.

A.M. Best considers the companies to be core subsidiaries as they are integral to Swiss Re's overall strategy and critical to its ongoing success and viability. They also generate a large majority of the group's total business and are material contributors to its market profile, operating performance and financial strength, as well as being generally well established in their individual market segments.

The rating reflects the leading global market position of the Swiss Re group of companies in the life and non-life reinsurance sectors as well as their superior financial strength and broad operating flexibility. The group is the second-largest reinsurer in the world, with almost U.S. $13 billion (21 billion Swiss francs) of net premium written in 1999, and commands a significant share of the major reinsurance markets globally. Swiss Re operates more than 70 offices in over 30 countries worldwide, providing local market presence, broad product capabilities, recognized technical expertise and large lines capacity to position it well to serve the growing demands of large multinational insurance and corporate clients. The group's superior capitalization--supported by a conservative reserving philosophy and prudent risk management strategy--enables it to absorb significant adversity while maintaining ample capacity to support ongoing business risks. In addition, strong capital-management strategies provide for the efficient allocation of capital resources to markets that afford the group the greatest opportunities for profitable long-term growth.

The rating also considers the group's diverse earnings base--achieved through targeted growth in more stable and profitable business segments such as life and alternative risk financing--which has mitigated earnings volatility in its dominant non-life reinsurance book. As a result, the group has sustained strong double-digit returns on equity, despite difficult market conditions and increased catastrophe losses that effect the property risk portfolio. Swiss Re initiated a group-wide program to eliminate under-priced risks and improve operating efficiencies within its non-life book to boost the segment's profitability.

In keeping with Swiss Re's strategy to attain a balanced risk portfolio, Swiss Re America Holding Corp.--its U.S. operation--acquired Life Re Corp. of Stamford, Conn., in 1999, and also completed several significant transactions relating to Life Re Corp's administrative reinsurance book of business. As a result, the group's life revenue represents almost 30% of the total gross premium, making Swiss Re the leader in the global life reinsurance market. Additionally, in the second quarter of 2000, the group completed the acquisition of the Underwriters Reinsurance Group, of Calabasas, Calif., bolstering its top-tier ranking in the U.S. non-life reinsurance market; at the same time, its distribution capabilities were expanded into the broker market complementing its established direct marketing capabilities.

Partially offsetting these positive rating factors are the continued competitive pricing pressures within the group's dominant non-life segment. This--combined with an increase in both natural and man-made catastrophe losses in 1999--has hampered Swiss Re's overall operating margin despite excellent growth in more profitable segments. While the group is exposed to high-severity risks, it manages them through risk diversification, selective underwriting and progressive claims management. Further, it has implemented aggressive actions to improve the long-term performance of the core operations. Accordingly, A.M. Best believes the group is well positioned to take full advantage of new opportunities, including any near-term improvement in the current non-life market.

The A++ (Superior) financial strength rating of Swiss Reinsurance Co. also applies to the following core non-life and life/health reinsurance and insurance companies worldwide and their substantially reinsured affiliates:

-- European Reinsurance Company of Zurich, Switzerland

-- Bavarian Reinsurance Co. Ltd.

-- Bavarian Reinsurance Ireland Ltd.

-- Swiss Reinsurance Company UK Ltd., United Kingdom

-- SR International Business Insurance Co. Ltd., United Kingdom

-- Swiss Re Life & Health Ltd., United Kingdom

-- Swiss Re Italia S.p.A., Italy

-- Swiss Reinsurance Company Canada

-- Swiss Re Life & Health Canada 

-- Swiss Re Australia Ltd., Australia

-- European International Reinsurance Co Ltd., Barbados

-- Swiss Re America Corp., USA

-- North American Specialty Insurance Co., USA

-- North American Capacity Insurance Co., USA

-- North American Elite Insurance Co., USA

-- Swiss Re Life & Health America Inc., USA

-- Life Reasurance Corporation of America, USA

-- Reassure America Life Insurance Co., USA

-- Washington International Insurance Co., USA

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.