A.M. Best Assigns Ratings to Lion Reinsurance Company Limited

A.M. Best Co. has assigned a financial strength rating of A-
(Excellent) and issuer credit rating of a- to Lion Reinsurance
Company Limited (Lion Re) (Bermuda). The outlook assigned to both
ratings is stable. The ratings reflect Lion Res excellent initial
capitalization, conservative operating strategy and explicit
parental support. The ratings also consider Lion Res strategic role
as a captive reinsurer of ASSA Tenedora, S.A., a subsidiary of
Grupo ASSA, S.A., a publicly traded holding company on the Panama
stock exchange. Also inuring to the rating is a sound business
plan, upon which the profitability and liquidity measures of this
rating are based. The rating is supported by an amount of capital
that meets A.M. Bests requirements for newly formed companies as
measured by Bests Capital Adequacy Ratio (BCAR). Lion Re will
operate as a Bermuda-based reinsurer focused on writing a
combination of property, casualty, health and group life business
from affiliated insurers. These positive rating factors are
partially offset by execution risk due to the unproven start-up
nature of the company. Drivers that could lead to a positive
outlook or rating upgrade are stable underwriting performance, as
well as reduced overall net exposure over the next few years and
successful implementation of the business plan. Factors that could
lead to a negative outlook or a rating downgrade are material loss
of capital from either claims or investments, a reduced level of
capital that does not support the rating, or an increase in net
retention. Lion Res rating is tied to AM Bests internal assessment
of Grupo ASSA, S.A.; therefore, unfavorable operating performance
or material loss of capital could result in changes to the captives
rating. In addition, A.M. Best will closely monitor Lion Res
progress against its business plan, which was used to assess the
initial rating. Material and/or adverse deviation from this plan
would likely result in downward pressure on the initial rating.
A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated in the
United States and throughout the world. For current Bests Credit
Ratings and independent data on the captive and alternative
insurance market, please visit www.ambest.com/captive. The
principal methodology used in determining these ratings is Bests
Credit Rating Methodology -- Global Life and Non-Life Insurance
Edition, which provides a comprehensive explanation of A.M. Bests
rating process and highlights the different rating criteria
employed. Additional key criteria utilized include: Risk Management
and the Rating Process for Insurance Companies; Understanding
Universal BCAR; Catastrophe Analysis in A.M. Best Ratings; Rating
Members of Insurance Groups; Assessing Country Risk; and
Alternative Risk Transfer (ART). Methodologies can be found at
www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best
Company is the world's oldest and most authoritative insurance
rating and information source. For more information, visit
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