AM Best


A.M. Best Downgrades Ratings of Risk Reinsurance Limited


CONTACTS:


Chi-Yeung Lok
Financial Analyst
+852-2827-3414
chi-yeung.lok@ambest.com

Ken Chow
Senior Financial Analyst
+852-2827-3426
ken.chow@ambest.com

Rachelle Morrow
Senior Manager, Public Relations
+(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com

Jim Peavy
Assistant Vice President, Public Relations
+(1) 908 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

HONG KONG - APRIL 02, 2014 01:15 PM (EDT)
A.M. Best has downgraded the financial strength rating to A (Excellent) from A+ (Superior) and the issuer credit ratings (ICR) to "a+" from "aa-" for Risk Reinsurance Limited (RRL) (Cayman Islands). The outlook for both ratings is stable. RRL is the single parent captive of Transpower New Zealand Limited (Transpower), the state-owned, sole operator of New Zealand's electricity grid.

The rating actions consider the high event retentions relative to RRL's capital target, which potentially could result in significant fluctuation of its risk-adjusted capitalization. Following a large dividend payment to Transpower in August 2013, RRL's capital target has been set at NZD 50 million.

Positive rating factors include RRL's excellent balance sheet strength and capital generation ability. The quality of Transpower's risk management has benefitted RRL's underwriting results since its inception and sustained its excellent capital generation ability so far.

Positive rating actions are unlikely at present. Negative rating actions could occur if RRL's capital target is further reduced relative to its event retentions.

The methodology used in determining these interactive ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Ratings are communicated to rated entities prior to publication, and unless stated otherwise, the ratings were not amended subsequent to that communication.

This rating announcement has been issued by A.M. Best Asia-Pacific Limited, which is a subsidiary of A.M. Best Company. A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.


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