A.M. Best Assigns Ratings to Lemma Insurance Company.

OLDWICK, N.J. -- A.M. Best Co. has assigned a financial strength rating of B+ (Very Good) and an issuer credit rating of "bbb-" to Lemma Insurance Company (Ukraine). The outlook for both ratings is stable.

The ratings reflect Lemma's strong risk-adjusted capitalisation for 2004 and 2005,

which is supported by good retained earnings. A.M. Best believes this level of risk-adjusted capitalisation will continue in the next two years. It is expected that Lemma's business profile will still be dominated by financial risk insurance (50% of gross premiums written), even though this line of business is declining. A 10% growth is expected to be achieved from cargo, property and medical insurance products in the next two years. A.M. Best believes that Lemma has a strong reliance upon financial risk insurance, thereby exposing the company to changes in the tax regime. Lemma will concentrate on sustaining and developing its current position in the Ukraine, where it has a leading market position, along with developing the existing products for the market. Overall moderate growth is anticipated due to tax environment uncertainty in the Ukraine. Lemma will continue to develop opportunities in foreign markets as well, though this will still only be a small proportion of total income.

In A.M. Best's opinion, Lemma's combined ratio is expected to increase from 70% to 76% over the next two years. This is emanating from the development of group medical insurance, which is anticipated to have a higher loss ratio. Also, current products tend to have volatile claims ratios for Lemma. There should be an improved performance from the company as it consolidates its business profile.

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.