OLDWICK, N.J.--(BUSINESS WIRE)--Aug. 4, 2006--
A.M. Best Co. has assigned a financial strength rating
of A- (Excellent) and an issuer credit rating of "a-" to Eastern Re
Ltd. SPC (Eastern Re) (Grand Cayman, Cayman Islands). Both ratings
have a stable outlook.
The rating recognizes Eastern Re's strategic affiliation with
Eastern Alliance Insurance Group (EAIG), an indirect subsidiary of
Eastern Insurance Holdings, Inc. (EIHI) (NASDAQ: EIHI) (both of
Lancaster, PA), its consistently profitable operating results and
sound stand-alone capitalization. These positive rating factors are
partially offset by Eastern Re's reliance on EAIG for producing the
majority of its assumed reinsurance business. Eastern Re also
participates as an assuming company in reinsurance treaties related to
non-workers' compensation business with an unaffiliated insurance
company.
Eastern Re, an indirect wholly owned subsidiary of EIHI, is a
segregated portfolio company, or cell captive. Agencies, associations
and group captive programs are able to participate in the financial
results of an individual segregated portfolio cell (SPC) through
ownership of preferred shares issued by Eastern Re. This dynamic
provides added incentive to the agency or group captive to prevent
adverse selection for the business being assumed by the SPCs at
Eastern Re. Currently, Eastern Re has 11 SPCs. Eastern Re's operating
performance has outperformed the workers' compensation industry by a
significant margin over the last five years, due in particular to loss
and loss adjustment expenses ratios that have been significantly below
the workers' compensation composite.
Pennsylvania domiciled EAIG consists of Eastern Alliance Insurance
Company (Eastern Alliance) and Allied Eastern Indemnity Company
(Allied Eastern), both of which are workers' compensation insurance
companies and Employers Alliance, Inc. (Employers Alliance), a third
party administration company. Eastern Alliance and Allied Eastern are
risk-bearing entities that provide fronting services to the SPC at
Eastern Re, and Employers Alliance provides claims administration and
risk management services to the SPCs. EAIG is currently rated A-
(Excellent) and has net assets in excess of $40 million.
For Best's Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.
For current Best's Ratings and independent data on the captive and
alternative insurance market, please visit www.ambest.com/captive.
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.
Source: A.M. Best Co.
Contact: A.M. Best Co.
Public Relations:
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Striegel, 908-439-2200, ext. 5378
rachelle.striegel@ambest.com
or
Analysts:
Steven Chirico, 908-439-2200, ext. 5087
steven.chirico@ambest.com
or
Henry Witmer, 908-439-2200, ext. 5097
henry.witmer@ambest.com