A.M. Best Affirms the Ratings of ACE European Group Limited

A.M. Best has affirmed the financial strength rating of A++ (Superior) and the issuer credit rating of “aa+” of ACE European Group Limited (AEGL) (United Kingdom). The outlook for both ratings is stable.

The ratings reflect AEGL’s excellent stand-alone risk-adjusted capitalisation, consistently strong operating performance and excellent business profile. The ratings also reflect the support provided to AEGL by its parent company, ACE Limited (ACE) (Switzerland) [NYSE: ACE], and AEGL’s importance within the ACE group. AEGL continues to be of strategic significance to its parent company as its main underwriting operation in the United Kingdom and Europe. In addition, the company receives significant reinsurance support from ACE group affiliates.

AEGL’s excellent stand-alone risk-adjusted capitalisation reflects the company’s strong operating performances in recent years and has been achieved in spite of dividend payments. In 2014, an interim dividend of GBP 50 million was paid (2013: GBP 75 million) but no final dividend was proposed.

AEGL achieved an excellent operating performance in 2014 with a profit before tax, but after equalisation reserve movement, of GBP 251.9 million (2013: GBP 57.3 million). Net catastrophe losses were relatively light at GBP 10.0 million (2013: GBP 3.8 million) and the underwriting result was supported by a substantial prior year reserve release. With market conditions continuing to be generally difficult throughout 2014, AEGL reported a 3% reduction in its gross written premiums to GBP 2.32 billion from GBP 2.39 billion in 2013. Assuming a normal level of catastrophes during 2015, AEGL is expected to achieve a similar technical result in 2015 to that reported in 2014, reflecting targeted business growth although market conditions remain challenging.

AEGL has an excellent business profile in its core U.K. and continental European markets, as an underwriter of a well-diversified portfolio of property and casualty, accident and health and specialty personal lines insurance.

A positive or negative rating action for AEGL could arise following positive or negative action with respect to the ACE group’s ratings, although this is considered unlikely in the near term. Weaker than expected operating performance or a material reduction in AEGL’s contribution to the group could exert negative pressure on AEGL’s ratings.

The methodology used in determining these 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.

Key insurance criteria reports utilised:

• Catastrophe Analysis in A.M. Best Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR.

In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.

This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best CompanyDavid Drummond, +(44) 20 7397 0327Senior Financial [e-mail] Thomas, +(44) 20 7397 0281Director, [e-mail] Sharkey, +(1) 908 439 2200, ext. 5159Manager, Public [e-mail] Peavy, +(1) 908 439 2200, ext. 5644Assistant Vice President, Public [e-mail]