A.M. Best Downgrades Rating of The West of England Ship Owners Mutual Insurance Association and Places It Under Review.

OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating of The West of England Ship Owners Mutual Insurance Association (WOE or the Club) (Luxembourg) to A- (Excellent) from A (Excellent) and assigned an issuer credit rating of "a-". At the same time, the ratings have been placed under review with negative implications.

The downgrade reflects the impact of poor performance, including anticipated performance at year-end February 2006, on the Club's risk adjusted capitalisation. The rating has been placed under review while A.M. Best assesses the impact of actions that the Club is expected to take to address its weakened risk-adjusted capitalisation. However, if the Club fails to take any action, its rating could be downgraded further.

A.M. Best believes that WOE's risk-adjusted capitalisation will weaken at year-end February 2006, with an anticipated decline in retained surplus for the second year running to approximately USD 130 million (down from USD 134 million at year-end February 2005). This represents a USD 15 million reduction since year-end February 2004. Over the same period, premium risk is likely to increase as a result of anticipated growth in net premiums to over USD 200 million from USD 168 million.

A.M. Best anticipates a further underwriting loss for the year ending February 2006, with the combined ratio likely to be approximately 115%. While this represents an improvement from the previous year's combined ratio of 118%, it is still expected to produce a technical loss close to USD 30 million (USD 34 million loss in 2004-05). While A.M. Best forecasts solid investment returns for year-ending February 2006 of approximately USD 29 million, this will prove insufficient to produce a profit after tax.

In A.M. Best's opinion, WOE holds a strong position within the International Group (IG) of Protection & Indemnity (P&I) Clubs as the fourth largest by gross owned tonnage (59.1 million for the policy year 2005). Additionally, the Club's profile benefits from the claims and loss prevention services offered to members from its offices based in London, Hong Kong and Greece.

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

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.