MXRE Max RE Capital Ltd. (MM)

A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit ratings (ICR) of "a-" of Max Re Ltd. (Max Re) and its affiliated companies. A.M. Best has also affirmed the ICR of "bbb-" of Max Re Capital Ltd. (NASDAQ: MXRE) (both of Hamilton, Bermuda). All ratings have a stable outlook. (See below for a detailed list of the ratings.) These ratings reflect Max Re's diversified mix of traditional property/casualty products, along with its life and annuity business, solid operating results and an experienced management team. Its book of business, which predominately contains long-tail casualty lines, is fully supported by the company's excellent level of risk-based capitalization and risk management controls. Lines of business include professional liability, general liability, aviation and marine, property, workers' compensation and medical malpractice lines. Max Re's life and annuity business focuses on existing blocks of business where risk is generally reinsured on the same basis as the original policy. Life and annuity reinsurance products may include individual and group disability, whole life, universal life, structured settlements and others. In response to more attractive property/casualty premium rates over the past several years, Max Re has increased writings in more traditional property reinsurance and insurance products. For the year-ended December 31, 2005, Max Re's property/casualty results were just under breakeven despite 2005 hurricane season losses of approximately $123.4 million. The operating results continue to be complemented by the performance of Max Re's traditional and alternative investment portfolios. The alternative investment portfolio consists of highly diversified and closely managed hedge funds. Partially offsetting these strengths is Max Re's predominately long-tail casualty orientation of its book of business. Due to the long-term nature of these lines, pricing and reserve adequacy may not be apparent for several years. Furthermore, A.M. Best believes that the potential variability of Max Re's alternative investment portfolio introduces an elevated risk factor to the company; however, this risk factor is included in Max Re's risk-based capital model. The FSR of A- (Excellent) and the ICRs of "a-" have been affirmed for Max Re Ltd. and its following operating subsidiaries: -- Max Re Europe Limited -- Max Insurance Europe Limited The ICR of "bbb-" has been affirmed for Max Re Capital Ltd. For Best's Ratings, an overview of the rating process and rating methodologies, please visit http://www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 330 reinsurance companies, please visit http://www.ambest.com/reinsurance/. 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.