Best Assigns ‘A-‘ Ratings to Hiscox Guernsey Specialty Sub

April 3, 2006

A.M. Best Co. announced that it has assigned a financial strength rating of “A-” (Excellent) and an issuer credit rating (ICR) of “a-” to Hiscox Insurance Company (Guernsey) Ltd., the U.K.-based Group’s specialist offshore insurer. The outlook for both ratings is stable.

“The ratings reflect Hiscox Guernsey’s excellent risk-adjusted capitalization, consistently strong financial performance and strong business profile for the specialist classes written,” said Best. “Additionally, Hiscox Guernsey benefits from the explicit support of other Hiscox group members.”

Best noted: “Hiscox Guernsey’s risk-adjusted capitalization is enhanced by explicit support in the form of a comprehensive reinsurance program placed principally with Hiscox Insurance Company (Bermuda) Ltd. (Hiscox Bermuda).” The rating agency also indicated that it “anticipates that Hiscox Guernsey will cede a substantial proportion of its gross written premiums during 2006, with the greater part placed with Hiscox Bermuda.”

Best said it “believes that Hiscox Guernsey’s capital and surplus is likely to increase to approximately $40 million at year-end 2006 (up from $30 million in 2005), which provides strong support for the company’s residual net exposure.”

Best also anticipates that “Hiscox Guernsey’s strong financial performance is likely to continue in 2006 and 2007. As a result of the high level of reinsurance ceded, A.M. Best believes that Hiscox Guernsey will be largely dependent upon overrider commissions to achieve profitability. However, excellent gross performance will continue to be sustained by the highly profitable nature of the niche lines underwritten.”

Best also said it “believes that Hiscox Guernsey benefits from a strong business profile for its specialist lines of business, including kidnap & ransom and fine art. In A.M Best’s opinion, it is a significant leader in the offshore fine art market and has a dominant position in the kidnap & ransom market.”