OLDWICK, N.J., July 9, 2008
A.M. Best Co. has removed from under review with negative implications and affirmed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of the members of Excess Reinsurance Group (Philadelphia, PA). The group consists of Excess Reinsurance Company (Excess Re) (Delaware) and its wholly-owned subsidiary, Guilderland Reinsurance Company (Guilderland Re) (New York). The outlook assigned to all ratings is stable.

Concurrently, A.M. Best has withdrawn the FSR of A- (Excellent) and ICR of “a-” of Excess Reinsurance Group reflecting that it has been effectively dismantled.

These rating actions follow the recent acquisition by KnightBrook, LLC of Excess Re and Guilderland Re, both of which are now separately rated. The previous reinsurance pooling arrangement between the companies is no longer in effect, and KnightBrook, LLC will implement different strategies for the companies. As part of the acquisition, Northwestern Insurance Company, a Pennsylvania insurance company owned by one of KnightBrook, LLC’s shareholders and not rated by A.M. Best, was merged with and into Excess Re and ceases to exist.

Excess Re, which management plans to rename KnightBrook Insurance Company, will be reactivated to write business emanating from various insurance programs controlled by the shareholders of KnightBrook, LLC.

Excess Re’s ratings reflect its excellent current and prospective balance sheet strength and the conservative business plan being implemented by its new owner. Partially offsetting these positive rating factors are the challenges related to executing the business plan in a competitive environment and the company’s relatively high stock investment leverage.

Management has indicated that Guilderland Re will remain in run off for the foreseeable future but continue to be fully supported, both financially and administratively. Its ratings recognize its excellent capitalization, the stable run off of its remaining liabilities and its ultimate ownership by a group of shareholders with significant financial flexibility. Partially offsetting these positive rating factors is the uncertainty associated with the company’s longevity as it winds down with minimal remaining liabilities.

For Best’s Ratings, an overview of the rating process and rating methodologies, please visit Best's Rating Center

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

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