A.M. Best Affirms 'A+' -Superior- Rating ofHannover Reinsurance Co.

OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 16, 1998--A.M. Best Co. has affirmed the "A+" (Superior) rating of Hannover Reinsurance Co., Hannover, Germany, and removed the rating from under review.

The rating follows A.M. Best's favorable review of Hannover Re's proposed acquisition of Clarendon

National Insurance Company and its subsidiaries. In August, Hannover Re, Germany, announced that it had agreed in principle to acquire Clarendon, a specialty program underwriter in the United States, for $500 million. The acquisition will considerably increase Hannover Re's insurance presence, and provide product diversification and potentially greater earnings stability to the entire group. Following the closing of the transaction, Hannover Re will continue to maintain considerable financial flexibility, with an adjusted debt to total capital ratio of less than 20%.

The rating applies to Hannover Re, E+S Rueckversicherungs AG, Hannover Reinsurance (Ireland) Ltd. and to E+S Reinsurance (Ireland) Ltd. All of these companies are core subsidiaries of the Hannover Re Group -- the fifth-largest in the global market in terms of gross premiums written.

Hannover Re's "Superior" rating reflects the company's solid operating performance and strong capitalization. These strengths are derived from management's disciplined underwriting practices, conservative reserves, efficient operating structure, excellent liquidity and focused professional management. The rating also reflects the geographical diversification of the group's business, its broad product offering, and ability to implement strategic acquisitions to enhance a balanced portfolio. The Hannover Re Group offers a broad array of traditional reinsurance and financial reinsurance products. The rating also recognizes the pioneering role Hannover Re has played in securitizing risk capital, which has enhanced its capital flexibility. Hannover Re's capitalization is strong, due primarily to their strong reserve position and market value of their investments.

Offsetting these strengths is the competitive environment in the deregulated German market, in particular in the motor sector. However, the proportion of the German business decreased for the group, from 38% in 1996 to 31% in 1997. In addition, underwriting discipline will be severely tested because of the continued soft conditions of the global reinsurance market. A. M. Best believes the group should be able to address the competitive challenges by remaining focused on bottom-line underwriting.

A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at http://www.ambest.com.