Rating agency Standard & Poor's, in response to the expected completion of Markel Corp.'s acquisition of the Bermuda-based Terra Nova Group, including Compagnie de Reassurance d'Ile de France (Corifrance), later this month, yesterday placed its ratings on the reinsurer, Corifrance, on "credit watch with negative implications''.

The ratings on Terra Nova Group were placed on CreditWatch with positive implications on October 21, 1999, and revised to developing implications on January 26, 2000.

At the same time as this action, the ratings on Markel were placed on CreditWatch with negative implications.

Following completion, Markel will carry out a full and detailed review of Terra Nova, under which it will assess the profit potential and, ultimately, the strategic importance of each entity. Terra Nova recently reported very weak results for 1999, with the final quarter combined ratio of 203.2 percent driving a combined ratio for the year of 129.4 percent. The net loss for 1999 was a disappointing $35 million.

Partly in light of these poor results, S&P believes that certain units within Terra Nova may be deemed by Markel to be non-strategic. The "credit watch'' placement reflects S&P's concerns that Corifrance may not benefit from the same degree of strategic importance within Markel as it currently enjoys within Terra Nova.

Corifrance is a small reinsurer, with 1999 net premiums written of $15.1 million and net assets of $37.6 million. The company has a modest, yet stable franchise in the international reinsurance arena, where it enjoys long-standing relationships with a selected client base, S&P said.