AM Best


A.M. Best Upgrades Ratings of AXA Corporate Solutions' U.S. Reinsurance Companies


CONTACTS:

Analyst(s)

Eric Nesbitt

(908) 439-2200, ext. 5629

eric.nesbitt@ambest.com

Public Relations

Jim Peavy

(908) 439-2200, ext. 5644

james.peavy@ambest.com

Rachelle Striegel

(908) 439-2200, ext. 5378

rachelle.striegel@ambest.com


FOR IMMEDIATE RELEASE

OLDWICK, N.J. - AUGUST 13, 2003 12:00 AM (EDT)
A.M. Best Co. has upgraded the financial strength ratings to B+ (Very Good) from B (Fair) of AXA Corporate Solutions Reinsurance Company (AXA CS Re) and its wholly-owned subsidiary, AXA Corporate Solutions Life Reinsurance (AXA CS Life Re) (both of Delaware). The outlook for both ratings is stable.

These actions reflect AXA Re (Paris) group's intent-following its decision to place these entities into run-off in January 2003-to conduct an orderly run-off of its U.S. reinsurance operations by supporting their surplus and liquidity requirements while policyholder obligations are settled.

Additionally, A.M. Best has affirmed the financial strength ratings of A- (Excellent) of the following non-reinsurance companies: AXA Re Property and Casualty Insurance Company, AXA Re America Insurance Company, AXA Corporate Solutions Excess and Surplus Lines Insurance Company (all of Delaware) and AXA Corporate Solutions Lloyds Insurance Company of Texas. These ratings have been removed from under review and maintain a negative outlook. The negative outlook reflects the uncertainty surrounding their financial performance and their future ownership following AXA Re group's decision in early 2003 to phase out its program business segment.

The ratings for the U.S. property/casualty and life reinsurance businesses, AXA CS Re and AXA CS Life Re, respectively, reflect resolved commitment issues and enhanced stability by virtue of AXA Re group's decision to reinforce the capitalization of these run-off entities. In 2002, AXA CS Re experienced underwriting losses, compounded by significant unrealized capital losses in the company's investment portfolio generated from its ownership of AXA CS Life Re. The life reinsurance business of AXA CS Life Re was severely impacted by the exposure to secondary guarantee lines of business-guaranteed minimum death benefit and guaranteed minimum income benefit products.

These losses have been offset by capital infusions from AXA Re group by means of surplus notes in 2003. AXA Re group has also committed to A.M. Best and Delaware regulators to prospectively support the life operations with additional funding, if necessary, to allow for a secure run-off of its policyholder liabilities. This in turn mitigates the earnings volatility experienced by AXA CS Re.

A.M. Best has concluded its review of the overall strategic importance of the aforementioned non-reinsurance U.S. entities to their ultimate parent. Their current ratings have been affirmed based on a predicated level of additional financial support from AXA Regroup. This support includes enhanced reinsurance support from the ultimate parent, which eliminates net catastrophe exposures for each of these entities, as well as providing AXA Re Property and Casualty Insurance Company with adverse development and prospective stop-loss covers, thereby restoring stability to their risk-adjusted capitalization at levels commensurate with an A.M. Best A- (Excellent) rating.

A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source.

Related Companies

For information about each company, including the Best's Credit Reports, group members (where applicable) and news stories, click on the company name. An additional purchase may be required.