Everest National Insurance

Publication date: 20-May-2002
Reprinted from RatingsDirect

Everest Reinsurance Holdings Inc. and Subs Ratings Affirmed; Outlook Revised to Positive
Analysts: Laline Carvalho, New York (1) 212-438-7178; Frederick Loeloff, New York (1) 212-438-7215

NEW YORK (Standard & Poor's) May 20, 2002--Standard & Poor's said today that it affirmed its single-'A'-minus counterparty credit and senior debt ratings on U.S.-based Everest Reinsurance Holdings Inc., an intermediary holding company that is ultimately owned by Bermuda-based Everest Re Group Ltd. (Everest), based on its operating companies' strong market position, very strong operating results, extremely strong capital adequacy, conservative investment strategy, and strong financial flexibility.

Standard & Poor's also said that it affirmed its double-'A'-minus counterparty credit and financial strength ratings on Everest Reinsurance Co.(Everest Re), Everest National Insurance Co., and Everest Reinsurance (Bermuda) Ltd.

In addition, Standard & Poor's revised its outlook on all these companies to positive from stable.

"The positive outlook reflects Everest's ability to produce operating results that have been consistently better than the industry average for the last five years," noted Standard & Poor's credit analyst Laline Carvalho. Partially offsetting these positive factors are the group's aggressive premium growth--including strong growth in primary workers' compensation business over the last two years--and reduced reinsurance program.

Standard & Poor's believes the group's business position is strong, with its main operating subsidiary, Everest Re, ranking as the sixth largest domestic reinsurer based on policyholders' surplus and seventh largest based on net premiums written at the end of 2001. Although treaty and facultative reinsurance remain the group's main lines of business, over the last two years, primary insurance writings have increased substantially.

In 2002, Everest's business mix is expected to change slightly toward longer-tail lines of business. Operating results are expected to be very strong in 2002 and 2003. In addition, any potential reserve deficiency is expected to be modest and have no material impact on the group's earnings or capital adequacy over the medium term.

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