A.M. Best Assigns Initial Rating to Hampton Re.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Oct. 22, 2001 A.M. Best Co. has assigned an initial financial strength rating of A- (Excellent) to Hampton Re Limited, Hamilton, Bermuda. The rating assignment follows the completion of private equity offerings by the insurer's parent organization - Hampton Re Holdings, Limited, Bermuda - which to date has raised approximately $218 million of capital. The rating reflects the 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. expertise and experience of the executive management team, which draws from the insurance and 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. disciplines, and A.M. Best's expectation that Hampton Re will develop strong relationships with several prominent insurance and reinsurance writers of life, health and annuity products. Also, the rating recognizes the roles of J.P. Morgan Chase & Co. and its affiliates, including providing Hampton Re with investment management advice, investment banking services and a letter of credit facility. J.P. Morgan Ventures Corporation is an investor in Hampton Re Holdings Limited. Additionally, the rating considers the favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. risk adjusted capitalization, financial flexibility and disciplined underwriting philosophy represented in Hampton Re's business plan and financial projections. Hampton Re's initial capitalization will provide considerable financial flexibility relative to its projected financial results for the next three years. Since its initial capitalization in February 2001, Hampton Re's initial operating focus has been to provide reinsurance capacity for in-force blocks of life insurance business in order to assist U.S. based life insurers and reinsurers realize various strategic objectives. Hampton Re entered into its first block reinsurance transaction earlier this month and a second transaction is bound and expected to close by October 31, 2001. Hampton Re's business model, combined with the existence of a secured letter of credit facility provided by Morgan Guaranty As a verb, to agree to be responsible for the payment of another's debt or the performance of another's duty, liability, or obligation if that person does not perform as he or she is legally obligated to do; to assume the responsibility of a guarantor; to warrant. Trust Company of New York New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of (MGT MGT Management MGT Multi-Gigabit Transceiver MGT Master Guide Table MGT Midwestern Gas Transmission (gas pipeline company) MGT Measured Gas Temperature MGT Mobile Global Title MGT Marine Gas Turbine MGT Mobile Ground Terminal ), adequately supports policyholder Policyholder An individual who owns an insurance policy. liabilities given the assumed level of life insurance risks and planned investment activities. These favorable attributes are partially offset by the execution risk associated with any start-up operation as well as Hampton Re's distinctive investment portfolio, which consists of two investment classes, an alternative asset portfolio as well as a traditional portfolio of assets. The alternative assets Alternative Assets A term referring to non-traditional assets with potential economic value. Notes: Examples of alternative assets include art and antiques, precious metals, fine wines, rare stamps and coins, and other collectibles such as sports cards. are managed by two successful hedge fund hedge fund, in finance, a highly speculative, largely unregulated investment device. Originating in the 1950s, the funds "hedge" by offsetting "short" positions (borrowing a security and then selling it at a higher price before repaying the lender) against "long" managers: Highbridge Capital Management and Atticus Management. A.M. Best recognizes the potential for volatility inherent in the company's anticipated investment of shareholder capital; mitigating this risk will be traditional high-quality fixed income assets supporting reinsurance reserves. Hampton Re's fixed income assets will be managed by J.P. Morgan Investment Management, Inc., an investment management company with an extensive track-record and experience in managing such types of assets. A.M. Best expects that as Hampton Re's insurance premiums grow, traditional investments will represent the majority of its total invested assets. Having performed extensive due diligence Research; analysis; your homework. This term has caught on in all industries, because it sounds so "wired." Who would want to do analysis or research when they can do due diligence. See wired. on the performance, volatility and risk management controls of the hedge funds and Hampton Re, A.M. Best has analyzed the sensitivity of the company's economic capitalization to unexpected changes in investment conditions. Moreover, A.M. Best has reviewed the terms of Hampton Re's credit facility with MGT, which provides additional support to the company's clients. Consequently, A.M. Best is comfortable with Hampton Re's capacity to withstand potential volatility in investment returns without compromising policyholder security. Hampton Re's domicile domicile (dŏm`əsīl'), one's legal residence. This may or may not be the place where one actually resides at any one time. The domicile is the permanent home to which one is presumed to have the intention of returning whenever the purpose provides both regulatory and pricing advantages as well as access to an important reinsurance center. A.M. Best will monitor closely Hampton Re's performance relative to its initial business plans and how it is impacted by competitive market conditions and investment results, which may not remain consistent with historical results. 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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