A.M. Best Assigns Negative Outlook to Imagine Insurance Company Limited; Affirms Ratings.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating (ICR) of "a-" of Imagine Insurance Company Limited (Imagine) (Barbados). The ratings have been removed from under review and assigned a negative outlook.

These rating actions follow A.M. Best's review of Imagine's acquisition of Danish Re and the current uncertainty regarding the finite reinsurance market. The acquisition of Danish Re provides Imagine with a traditional reinsurance platform primarily writing worldwide business in property, accident and health and financial institutions in the Lloyd's of London syndicate market. Although the acquisition carries an increased level of execution risk as Imagine merges new systems and staff with existing infrastructure, the overall addition of Danish Re is complementary to Imagine's global strategy of writing specialty insurance and reinsurance, which includes both finite risk and traditional reinsurance with contractual caps or other loss mitigating features. Following the Danish Re acquisition, Imagine's risk-based capital remains supportive of its current rating.

The negative outlook is based on the current uncertainty of the finite risk market. The heightened level of scrutiny by state and federal regulators focused on finite reinsurance and contractually capped multi-year reinsurance transactions has resulted in subpoenas being issued to both sellers and buyers of finite products. Imagine's business profile includes a substantial level of products that fit into these categories and as a result, present a heightened level of operational risk to the company. The future viability of finite products will remain uncertain until current government scrutiny is complete and any new requirements regarding finite products are established.

Formed in late 2000, Imagine's focus continues to provide global finite risk and traditional reinsurance offerings to clients that include insurers, reinsurers and corporate customers. Imagine's products provide structured solutions on an individual customer basis. Its primary business is writing low-volatility, contractually capped multi-year reinsurance contracts with actuarially assessed cash flows that pay out over several years. Limits are imposed on each individual contract, which provides structural protections such as aggregate exposure protection.

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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 http://www.ambest.com.