A.M. Best Downgrades Rating of The Underwriter Insurance Company Limited

A.M. Best Co. has downgraded the financial strength rating to B+ (Very Good) from B++ (Very Good) of The Underwriter Insurance Company Limited (TU), United Kingdom.

The outlook remains negative.

The downgrade to B++ on April 8, 2003, was based on the assumption that there would be no further deterioration in the capital base. Today’s downgrade reflects A.M. Best’s understanding that TU’s loss reserves will require further significant strengthening.

As a result of the reserve strengthening, TU’s capital position will deteriorate to approximately GBP 45 million (USD 67 million) (a decline of more than 40% from year 2000 levels). TU has revised its business strategy and introduced a wide range of measures to restructure the composition and risk profile of the portfolio, reduce expenses and enhance underwriting control. Management has commented that they will not be receiving a capital injection from existing shareholders in the short term.

Expectations:

Maintenance of the B+ rating is based on A.M. Best’s expectations that there will be no further deterioration in TU’s capital base and the successful implementation of the revised business strategy.