The new Bermuda reinsurer Empyrean Re, capitalised this month with $150 million of equity capital, has been assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” by ratings agency A.M. Best. The outlook for both ratings is stable.

The ratings of Empyrean Re, which was sponsored by the man Group plc, are based on its excellent capitalisation, experienced management team and sound business plan.

These strengths are partially offset by the untested start-up nature and the mono-line orientation of the company. Man Group plc is the sole strategic investor and Empyrean Re will be a wholly-owned subsidiary of Man Group Holdings Ltd., which is the asset management division of Man Group plc. No debt is contemplated in the business plan.

The ratings are supported by an amount of risk-adjusted capital that has met A.M. Best’s stringent requirements for newly formed companies. Empyrean Re will operate as a Bermuda-based reinsurer writing direct, reinsurance and retrocessional short-term trade credit coverage produced through the broker market.

A.M. Best is concerned that there is execution risk inherent in the start-up of a specialist reinsurance company that writes only one line of business. These concerns are partially mitigated by the experience of the management team, as well as the low underwriting leverage contemplated in Empyrean Re’s business plan and the anticipated support of the Man Group plc.

Empyrean Re’s assets will be partially invested in high quality, short-term fixed income securities and partially invested in a fund of funds, namely RMF Four Seasons, a diversified portfolio from a Man Group plc subsidiary.

Man Group plc is a global provider of alternative investments products and is listed on the London Stock Exchange (EMG: LN) and is a constituent of the FTSE 100. As of September 30, 2006, Man Group plc had net assets of $4.1 billion and market capitalization of $16 billion. Man Group plc has over $56 billion of funds under management.

In addition to the risks presented by a start-up entity, A M. Best anticipates that the management of Empyrean Re will be challenged by tight competition in the trade credit marketplace. Additionally, although Empyrean Re’s business plan anticipates establishing a presence in Europe, the majority of trade credit business is sourced from Continental Europe and the United Kingdom. However, as a start-up Bermudian reinsurer this may be a disadvantage from a business production standpoint.

The ability of Empyrean Re to effectively build market acceptance can only be proven over time. In the interim, A.M. Best will closely monitor Empyrean Re’s progress against the business plan used to assess the assigned ratings. Any material, adverse deviation from this business plan would likely result in downward pressure on the assigned ratings, the agency said.