Capital Re Corporation Comments On Moody's Aa2 Financial Strength Rating of Capital Reinsurance Company.NEW YORK--(BUSINESS WIRE)--March 10, 1999--Capital Re Corporation's (NYSE NYSE See: New York Stock Exchange :KRE KRE Kauffman Racing Equipment KRE Kuwait Real Estate (bank) KRE Keffalas Real Estate, Inc KRE Key Results Expected KRE Karl Real Estate KRE Kernel Rules Enforcement KRE Korea Research Environment ) financial guaranty 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. operating subsidiary, Capital Reinsurance Company, currently rated AAA AAA: see American Automobile Association. (Triple A) A common single-cell battery used in a myriad of electronic devices of all variety. Like its double A (AA) cousin, it provides 1.5 volts of DC power. When used in series, the voltage is multiplied. by Standard & Poor's Corporation and Fitch IBCA IBCA International Braille Chess Association IBCA Institute of Burial and Cremation Administration IBCA Integrated Business Communications Alliance IBCA International Barbeque Cookers Association IBCA Department of Interior Board of Contract Appeals has been downgraded to Aa2 by Moody's Investors Service Moody's Investors Service A leading global credit rating, research and risk analysis firm. Moody's Investors Service A leading firm engaged in credit rating, risk analysis, and research of fixed-income securities and their issuers. . The rating action was not a result of near or intermediate term credit concerns. Capital Re believes that the projections for continued growth in the financial guaranty business remain strong and the Company remains committed to its primary financial guaranty insurance clients. Under certain of its reinsurance agreements, Capital Reinsurance has agreed to increase the ceding commission payable to two of its financial guaranty ceding companies as a result of the rating action by Moody's. The increase will apply to in-force and future business ceded from those companies. The amount of the increase is based on the reduction of capital credit Moody's gives to the ceding companies for reinsurance ceded to Capital Reinsurance. The financial impact of the contractual increase in ceding commissions is not expected to exceed $2.0 million, on an after-tax basis After-tax basis The comparison basis used to analyze the net after-tax returns on a corporate taxable bond and a municipal tax-free bond. , in 1999. As disclosed in Capital Re's current SEC Form 10-K Annual Report, the reinsurance agreements with the two ceding companies also give those companies an option to reassume Re`as`sume´ v. t. 1. To assume again or anew; to resume. business previously ceded to Capital Re if the Moody's capital credit is reduced below certain levels; however, those options to fully reassume will not be triggered by the reduction in capital credit associated with today's reduction in rating. Additionally, one of the ceding companies may reassume a minor portion of its previously ceded business based on today's rating action alone, however, that company has not indicated that they will exercise the option. On February 24, 1999, Capital Re announced that the ACE group had agreed to invest $75 million in Capital Re Corporation in the form of a purchase of common stock. A condition to the closing of that investment was the affirmation the Capital Reinsurance's triple-A financial strength rating from Moody's. Capital Re is currently in discussions with the ACE Group regarding the impact, if any, of the rating action on the pending investment. Capital Re is a specialty insurance group providing innovative solutions to problems of risk and financial management. Capital Re's product lines currently include financial guaranty, mortgage, title, trade credit and financial lines. |
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