A.M. Best Downgrades Rating of LaSalle Re Limited.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--May 17, 2002 A.M. Best Co. has downgraded the financial strength rating of LaSalle Re Limited (LaSalle), Bermuda, to B++ (Very Good) from A- (Excellent) and has placed both its financial strength and "bb" preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. ratings under review with negative implications. These rating actions follow a recent announcement by LaSalle's parent, Trenwick Group Ltd. (Trenwick), that it has voluntarily placed LaSalle's operations into run-off. Effective April 1, 2002, LaSalle entered into a 100% quota share For This article is about quota shares (shares of the quota). For other usages of quota, see, see . A quota share is a specified number or percentage of the allotment as a whole (quota), that is prescribed to each individual entity (see Non-tariff barriers to trade). 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. agreement with Endurance Specialty Ltd. relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc LaSalle's in-force premiums. Additionally, Endurance has acquired renewal rights to LaSalle's property catastrophe reinsurance contracts. LaSalle's compensation includes a ceding cede tr.v. ced·ed, ced·ing, cedes 1. To surrender possession of, especially by treaty. See Synonyms at relinquish. 2. commission and profit sharing profit sharing, arrangement by which employees receive, in addition to their wages, a share of the net profits of a business. The purpose is to give them an incentive to increase their output through enhanced morale, less wasteful use of materials, better care of agreement relating to the 2002 accident year business transferred to Endurance. Under this reinsurance structure, LaSalle retains all outstanding policyholder liabilities relating to premiums earned prior to the effective date of the reinsurance agreement. A.M. Best expects that the excess capital created at LaSalle as a result of this transaction will be utilized to pay down bank debt at Trenwick and to support its continuing core businesses. Although LaSalle's anticipated runoff margin appears adequate to meet its current policyholder obligations, the under review status of the ratings reflect some uncertainty with respect to its current reserve position. LaSalle's ratings will remain under review pending A.M. Best's review of its current reserve position and a stress scenario analysis Scenario analysis The use of horizon analysis to project total returns under different reinvestment rates and future market yields. related to the group's capital and liquidity margin subsequent to this strategic shift from a going concern to a run-off operation. Additionally, A.M Best has maintained its negative outlook on the A- (Excellent) financial strength rating of Trenwick Group as A.M. Best continues to work closely with the group's management to assess its current capital structure and prospective earnings capacity. 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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