Insurer Alea Group (Bermuda) Ltd. yesterday had its financial strength rating of A- (Excellent) affirmed by ratings agency A.M. Best., which predicted the company was likely to increase premium income by a further 20 percent in 2004 to approximately $1.56 billion

A.M. Best said the affirmation was based on the group?s ?excellent level of consolidated risk-based capital and improving market profile?.

?Alea?s strong underwriting performance is partially offset by uncertainties with regard to future claims inflation for its US casualty book of business, which could negatively impact future earnings,? A.M. Best said.

?Risk-adjusted capital is expected to remain in the excellent range, as A.M. Best?s concerns regarding potential growth-related capital strain were substantially addressed by the $263 million net proceeds from Alea?s initial public offering in November 2003. Alea intends to commence paying dividends in 2004, although the majority of earnings are likely to be retained to support future growth.?

Best said Alea was likely to achieve a return on equity of more than 12 percent in 2004 and 2005 ?as the high volume of premium written in the hard market is earned through the income statement?.

?Alea is likely to grow premium income by a further 20 percent in 2004 to approximately $1.56 billion as it continues to allocate capacity to ART risks, specialty and US casualty business where pricing and conditions remain firm,? Best said.

The insurance industry has been in a ?hard market? since the terrorist attacks of September 11, 2001, but several sectors, notably directors and officers coverage, have now begun to soften.

?A.M. Best believes Alea has been successful in transitioning its strategic focus, and the emerging presence of Alea North America Insurance Company brings the group closer to its principal market,? the agency said.