A.M. Best Co. has affirmed the financial strength rating of A+ and the issuer credit ratings of ?aa-?of the reinsurance operating subsidiaries of Everest Re Group Limited and said the Bermuda-based company is well positioned within its business sector to continue to outperform its peer group. The outlook for all ratings is stable. The ratings reflect Everest Re?s strong historical track record of generating favourable earnings despite interim setbacks from significant industry events.

Everest Re took close to a $1.8 billion in catastrophe-related storm losses during the past two years and turned in disappointing results in the first quarter, but has maintained a ten-year average return on equity of 11 percent.

The ratings agency also pointed to Everest Re?s strong risk-adjusted capital position, excellent financial flexibility and a well-established franchise.

Offsetting the positives is the profile of Everest Re?s reserve leverage, which makes the group?s capitalisation susceptible to potential deterioration. The group?s loss reserve base consists of a significant amount of reserves from long-tailed lines of business, which are potentially subject to more variability than short- tailed lines. Everest Re?s reserve base includes $460 million of asbestos and environmental reserves. At March 2006, the group maintained shareholders? equity in excess of $4.27 billion, net loss reserves exceeded $8.2 billion.

?The current hard market for property classes is narrowly focused and may not have the longevity that some participants are anticipating,? Best said adding that the commercial casualty segment, while still profitable, continues to soften.