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CAPITAL REINSURANCE COMPANY CLAIMS-PAYING ABILITY RATED 'Aaa'; MOODY'S RATES FINANCIAL GUARANTY REINSURANCE COMPANY

 CAPITAL REINSURANCE COMPANY CLAIMS-PAYING ABILITY RATED 'Aaa';
 MOODY'S RATES FINANCIAL GUARANTY REINSURANCE COMPANY
 NEW YORK, July 30 /PRNewswire/ -- Moody's Investors Service announced that it has assigned a "Aaa" claims-paying rating to Capital Reinsurance Company (Capital Re), a Maryland-domiciled, multi-line reinsurance company that began business in 1988. Capital Re is an integral part of the financial guarantee industry and offers support to the business of the primary insurers.
 According to William F. deSante, vice president and managing director for Moody's structured finance ratings group, "Capital Re has built a strong statutory capital base that is more than sufficient to pay claims under various stress simulations. In addition, Capital Re's strong management and innovative approach to reinsurance provides the company with a competitive advantage in the market. Capital Re's underwriting strategy targets facultative reinsurance on capacity- constrained issues, while also assuming exposure on a treaty basis. Capital Re's willingness to accept various risks on a facultative basis gives the company significant control over the credit quality of its portfolio and provides the primary insurers with additional capacity on large, capacity-constrained issues."
 In its analysis of Capital Re's claims-paying ability, which will be published later this week, Moody's stated, "Capital Re assumes business from all of the major insurers. With the current low premium environment, there is a risk that the primary insurers may want to retain more business. Capital Re plans to combat this potential loss of business by functioning as an underwriting partner and participating in product development and niche markets. Overall, Capital Re's proactive, innovative business strategy has added strength and stability, and made the company less reliant on the fortunes of the primary insurers."
 Capital Re is able to manage its risks through the effective use of retrocessions (ceding business to another reinsurer) and creative reinsurance arrangements. By retroceding its exposure to international reinsurers, Capital Re diversifies the risk concentration of the industry and its own reinsured portfolio.
 Many of Capital Re's analysts, who have experience in both the municipal and non-municipal sectors, have been at Capital Re since its inception. Capital Re analysts review each facultative credit prior to its submission to an underwriting committee made up of senior management. For business assumed on a treaty basis, Capital Re performs a comprehensive analysis of the primary insurers and the underwriting guidelines. The firm's underwriting process has produced a reinsured portfolio of relatively strong quality and one that is well diversified by bond sector and geographic region.
 Moody's also noted that Capital Re has achieved impressive financial results within a relatively short period of time. Statutory net income, which was $13.4 million in 1991, grew substantially over the previous four years. Income consists predominantly of earned premium and investment income. Capital Re generated an impressive $66.5 million in gross premium written in 1991, or $49 million after retrocessions. Although Capital Re posted a small underwriting loss in 1991, Moody's expects underwriting results to improve as the firm continues to grow and mature. Investment income plus capital gains of $18.5 million was largely accountable for the positive net income in 1991, and first quarter 1992 results indicate a similar trend.
 Capital Re Corporation, the holding company of Capital Re, recently issued over 6 million common shares for which the corporation received approximately $61 million in capital. Most of the capital, about $52 million, was infused into the reinsurance subsidiary, Capital Re. USF&G, which previously owned over 25 percent of the corporation, fully divested its holdings through the offering. The offering also introduced public ownership of over 42 percent. Capital Re has a sister company, Credit Reinsurance Company, a Bermuda-domiciled company involved in the reinsurance of financial guarantee and related risks.
 Capital Re Corporation is planning to issue approximately $50 million in debt later this year. The company has declared limited dividends and, as a result, the recent equity offering and the proposed debt offering will add to the company's capital base and its claims- paying resources.
 -0- 7/30/92
 /CONTACT: William deSante, 212-553-0353, Laura Levenstein, 212-553-0319, Michele Beinhacker, 212-553-7779, or Allen Klee, 212-553-4117, all of Moody's/ CO: Capital Reinsurance Company ST: Maryland IN: INS SU: RTG


CK-PS -- NY033 -- 5067 07/30/92 11:46 EDT
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Publication:PR Newswire
Date:Jul 30, 1992
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