Standard & Poor's Ratings Services said it affirmed its `A+' counterparty credit and financial strength ratings on Renaissance Reinsurance Ltd. and its `A-' counterparty credit rating on RenaissanceRe Holdings Ltd..

The ratings agency said this was based on very strong capital adequacy at the reinsurance company of 161 percent as of year-end 2002, very strong and consistent earnings through the reinsurance cycle, and a very strong management team.

Standard & Poor's also said that the outlook on these two companies was stable.

It also said that financial flexibility remains very strong, with the holding company's common shares trading at 2.1x book value as of May 13, 2003, and debt leverage is appropriate for the rating range.

But it added that offsetting these strengths is the uncertainty around the long-term performance in newly diversified specialty reinsurance and individual risk business.

"With the passage of time and the emergence of significant underwriting, capital, and investment difficulties among many of the sector participants, RenaissanceRe Holding's underwriting track record of strong and consistent earnings is at present unparalleled," said Standard & Poor's credit analyst Karole Dill Barkley.

She said the earnings strength is bolstered by very strong cash flow, very strong financial flexibility, and a growing stream of underwriting risk-free fee income.

"The underwriting performance in the diversified lines of business is at present unproven, but Renaissance Reinsurance is expected to continue to outperform in the underwriting of property catastrophe reinsurance," Dill Barkley added.

S&P said RenaissanceRe Holding's business review has traditionally been limited by its monoline focus on property catastrophe risk.

And although Renaissance Reinsurance has most of its liabilities in this sector, the group has broadened its business position from strictly property catastrophe risk bearing to include individual risk through its Bermuda-based excess and surplus lines company.

It also offers catastrophe risk-management services through Renaissance Reinsurance and RenaissanceRe Holding's wholly owned subsidiary, Renaissance Underwriting Managers Ltd.

It also added that RenaissanceRe Holdings has also added premium in noncatastrophe specialty reinsurance lines at Renaissance Reinsurance, and this now constitutes 23 percent of gross earned premium for the group.

For more information go to www.standardandpoors.com.