affirmation of the "A '' (Superior) rating of Underwriters Reinsurance Group, by ratings agency A.M. Best Co.

Best said this week the rating was no longer under review. But the established rating agency did express some concern about Underwriters' aggressive appetite for risk together with the still developing liability for environmental policies.

Concern was also expressed for Venton's aggressive expansion plans and the potential effect on capitalisation standards.

Underwriters Reinsurance Co. just announced the $190-million cash acquisition of Venton, which conducts global insurance and reinsurance business with operations here and in London.

With this transaction, Best noted, Underwriters Re gained immediate access to Lloyd's global reinsurance market, which further broadened its intellectual capital resources, as well as diversified the group's growth and earnings prospects outside the US.

These positive near-term implications are derived from Underwriters Re's new ownership in Venton Underwriting Ltd. (an underwriting corporate member of Lloyd's), Venton Underwriting Agencies Ltd. (a Lloyd's managing agency) and three Lloyd's syndicates in which Venton is a corporate member and managing agent.

"The rating,'' Best said in a statement, "also reflects the group's consistently strong operating results, solid capitalisation and strong presence in the broker market.

"Over the years, Underwriters Re has been able to differentiate itself within the broker reinsurance market with proven underwriting expertise in its core working layer casualty business.

"It targets non-traditional business sources by having the flexibility to shift its business mix to capitalise on market opportunities, and by offering a broad array of products and services to its clients.

"Despite its more opportunistic approach, management also maintains a disciplined underwriting approach, as manifested by its underwriting results to date.'' Underwriters Re was also deemed to benefit from the strength and financial flexibility of parent Alleghany Corp., whose capital contributions have supported the group's rapid premium growth.

And broker market acceptance has been greatly enhanced by Underwriters Re's increased capital base, allowing it to offer larger participation and influence pricing and terms.

But Best concluded: "These strengths are attenuated by the group's rapid premium growth in recent years, continued debt servicing obligations, uncertainty related to asbestos and environmental liabilities and the dilutive impact resulting from the acquisition of Venton Holdings.

"In addition to intensified competition and pricing pressures in the reinsurance market, A.M. Best is concerned with Venton's aggressive near-term growth plans, which, combined with the use of short-term debt, could cause capitalisation to fall below A.M. Best's standards for a superior-rated company.''