A.M. Best Downgrades Rating of Electro Re.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 27, 2003 A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A- (Excellent) of Electro E`lec´tro n. 1. An electrotype. Re S.A., Luxembourg, a wholly owned 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. captive of Alcatel, which is based in Paris. The outlook is stable. The rating action reflects the effect of Alcatel's deteriorating financial profile on Electro Re's business position. The rating also factors Electro Re's excellent capital base, its comprehensive reinsurance programme and weakening operating performance. Deteriorating business position--Electro Re's premium income declined by 14% to EUR EUR In currencies, this is the abbreviation for the Euro. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 82 million (USD USD In currencies, this is the abbreviation for the U.S. Dollar. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. 87.9 million) in 2002, and a further significant reduction is expected in 2003. Electro Re, as a single parent captive, is dependent upon Alcatel's business, whose financial profile is deteriorating. Excellent capitalisation--Electro Re's risk-adjusted capitalisation--based on A.M. Best's capital model--remains excellent but at a lower level due to a reduction in equalisation Noun 1. equalisation - the act of making equal or uniform equalization, leveling human action, human activity, act, deed - something that people do or cause to happen reserves. Comprehensive reinsurance programme--Electro Re has a comprehensive retrocession RETROCESSION, civil law. When the assignee of heritable rights conveys his rights back to the cedent, it is called a retrocession. Erskine, Prin. B. 3, t. 5, n. 1; Dict. do Jur. h.t. programme with high quality providers. This programme contains multi-year contracts due to expire at the end of 2003, which Electro Re is currently renegotiating. A.M. Best will closely monitor any changes in retention levels. Current retention levels for both life and non-life are prudent, and the programme provides adequate protection. Weakening operating performance--As a result of significant losses in its investment portfolio, operating performance has weakened. Electro Re has written down a considerable amount in its equity portfolio. 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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