rating reaffirmed by Duff & Phelps Credit Rating Co. (DCR).

The outlook for the rating is stable, DCR said.

DCR said the company's revenue and earnings for the past 12 months were below DCR's expectations, due in large part to the competitiveness of the reinsurance market. More positively, the company has a relationship with a domestic insurer that could potentially provide it with a source of new annuity business to assume on its books.

AFC Re still enjoys a strategic advantage, DCR said, in its ability to offer reinsurance coverage at a lower cost than most competitors, due to its favourable tax status as a Bermuda corporation. The company is also well-served by its conservative investment policy and the growing demand for life and annuity reinsurance.

AFC Re reported $153.6 million in assets and $103.7 million in shareholders' equity at July 30, 1999. The capital structure does not include any debt, and the company has no plans to issue debt at this time.

Going forward, DCR expects that AFC Re's favourable tax status as a Bermuda-domiciled reinsurer will not change and it will not pay dividends to its parent, while continuing to maintain its very strong capitalisation.