Moody's rates White Mountains Re preferreds Ba2

Moody's Investors Service said it assigned a Ba2 rating to White Mountains Re Group, Ltd.'s proposed $250 million perpetual non-cumulative preference shares.

The outlook is stable.

The proceeds from the offering are expected to be used by White Mountains Re to further capitalize its reinsurance subsidiaries, including expansion of its Bermuda platform, and for general corporate purposes.

The agency said the rating reflects the strength of White Mountains Re's principal operating subsidiaries - Folksamerica Reinsurance Co. and Sirius International Insurance Corp. - including Folksamerica's disciplined underwriting, low operating leverage, good investment portfolio and reinsurance capacity and Sirius' strong economic capitalization, no material exposure to U.S. long-tail liabilities and good underwriting performance from the parent company.

These positives are offset by the potential for further reserve development on 2005 storm losses, continued exposure to U.S. catastrophe risk, heightened operational and financial risks following acquisitions and potential for impairment of reinsurance protection provided by Olympus Re and/or Helicon Re due to future catastrophes for Folksamerica and by the potential for run-off subsidiary Scandinavian Re to negatively impact the earnings of Sirius, Moody's said.

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