announced it is both pursuing a takeover and is itself a takeover target, has had its A (excellent) rating affirmed by A.M. Best.

The rating applies to Terra Nova Insurance Co. Ltd. UK, Terra Nova (Bermuda) Insurance Co. Ltd., and Compagnie de Reassurance d'Ile de France (Corifrance).

It reflects the group's "excellent financial performance, liquidity and conservative investment strategy'', a statement from the agency said.

But the market's extremely competitive conditions in the areas that Terra Nova operates along with rapid growth in gross and net premium volumes and historic reinsurance recovery issues offset the positive rating factors.

Corifrance's A-minus (excellent) rating was raised to A (excellent) reflecting its inclusion in the Terra Nova Group rating -- since September, 1997 when it was purchased.

The agency found Corifrance brought a "portfolio of profitable business to the group and enhanced penetration of the continental European markets''.

Its ties to Terra Nova provided increased financial security, with the portfolio protected by a whole-account stop-loss arrangement with Terra Nova (Bermuda).

Also affecting the rating, the Terra Nova Group has purchased a stop-loss cover, which now includes Corifrance.

A statement from A.M. Best said the rating reflected the "experience of the company's management team which has profitably expanded the business since Terra Nova (Bermuda) Holdings was set up in 1994.

"The holding company's financial performance continued to improve during 1998, with reported underwriting profit decreasing slightly to $6.6 million from $7.5 million in 1996,'' the statement said.

"This remained very favourable in relation to peers, particularly in view of the highly competitive trading environment.

"In August, 1999, the company announced that it would withdraw from selected motor and aviation business and the 1999 result will take a post-tax charge of $25.2 million.'' But the agency expected "underlying results of ongoing business'' to hold on to similar levels as 1998.

It found the Bermuda holding company's investment strategy "conservative'' with most assets invested in fixed-interest securities, and producing an average investment yield before realised gains and losses of 6.1 percent.

It rated the group as a "lead underwriter in most of its chosen classes -- property, casualty, marine, aviation and auto''.