triple-`A' claims-paying ability rating from Standard & Poor's (S&P), reflecting adequate levels of hard and soft capital in combination with prudent underwriting and operating guidelines.

RAM Re is a mono-line reinsurer of investment grade asset-backed and municipal securities and was scheduled to begin business also with a Aa3 rating from Moody's Investors Service.

S&P said the Bermuda company was able to get a better rating than Bermuda's own double-`A' sovereign rating, because it has satisfactorily met S&P requirements.

Among these requirements, RAM Re is an exempt company under the Bermuda Companies Act 1981 and is not permitted to write business that includes Bermuda risk; that it is exempt from exchange controls, and exempt from taxation.

RAM Re management's business plan assumptions were tested on S&P's capital adequacy model, resulting in a satisfactory margin of safety.

Founder, chairman, president and CEO is Robert A. Meyer, embarking on a second financial guaranty career after being president of Bond Investors Guarantor Insurance Co. (BIG) from 1984 to 1989.

S&P is satisfied that the core management team has solid expertise and experience in the financial guaranty industry.

As business volumes increase, the underwriting staff is projected to rise to 11 experienced professionals by the end of 2002, from a start-up staff of five.

Underwriting efforts will emphasise more specialised facultative reinsurance, a method of risk assumption that will enable RAM Re to better manage the risk of the insured portfolio and allocate its capital, based on the premium received per dollar of risk assumed.

While RAM Re's projected par written is split 60 percent municipal business and 40 percent asset-backed business, the proposed business plan assumes large books of capacity constrained municipal business ceded from the primaries, referred to as the jump-start book of business.

That business will allow the company to immediately generate earnings while building its insured portfolio.

As a triple-`A' rated reinsurer, RAM Re will adhere to the same zero loss underwriting standards as do the other triple-`A' rated financial guarantors.

RAM Re will be capitalised with $80 million in hard capital and $40 million of soft capital, with the latter consisting of a single $40-million letter of credit arranged by First Union National Bank of North Carolina (S&P rated single-`A') and confirmed by Bayerische Landesbank Girozentale (BLG, rated triple-`A').

A lead investor, PMI Mortgage Insurance Co., has provided a stand-by capital commitment of $40 million that can be drawn on if First Union or BLG fail in whole or part to perform under the terms of the letter of credit.

Other lead investors of RAM Re includes Greenwich Street Capital Partners LP and Continental Illinois Venture Corp.

S&P described the Bermuda reinsurer's outlook as stable, reflecting RAM Re's adequate capital levels and a satisfactory margin of safety.

W. Roger Haughton, president and CEO of The PMI Group, Inc. and PMI Mortgage Insurance Co. said, "Numerous industry participants have indicated a need for additional sources of highly rated financial guaranty reinsurance capacity.

"We believe this demand presents a very attractive opportunity for a new financial guaranty reinsurance company to enter the market. We believe PMI's skills in evaluating mortgage risk are very complementary with RAM Re's business plan.

"We expect RAM Re to quickly establish a strong position in their niche, based on the experienced management team assembled.'' The PMI Group is headquartered in San Francisco, and through its subsidiary, PMI, is the third largest private mortgage insurer in the US, based on the 1997 year end insurance in force of $77.8 billion. In addition to private mortgage insurance, the PMI Group, Inc., through its subsidiaries, is a leader in risk management technology, providing various products and services for the home mortgage finance industry, as well as title insurance.