A.M. Best Co. has assigned debt ratings to the two classes ofloan obligations issued by Panther Re Bermuda Limited, a newlycreated reinsurance sidecar financial vehicle for Hiscox, a Lloyd'ssyndicate.

The Oldwick, N.J.-based rating agency assigned a rating of“triple-b-minus” to Senior Secured Term A Loans of up to $72million and assigned a rating of “double-b” to the Term B Loans ofup to $144 million.

The outlook for both ratings is stable, Best said.

Panther Re is a new Bermuda Class 3 insurer, acting as adedicated reinsurance vehicle, or sidecar, which was created forthe single purpose of providing commercial property reinsurancecoverage for specified categories of business to its sole clientand cedent, Syndicate 33, a Lloyd's syndicate managed by HiscoxSyndicates Limited.

Best said the assigned ratings take into consideration manyfactors including the annualized attachment probability.

The attachment probability is the probability of a first-dollarloss to the debt facilities, which was calculated based upon datacompiled by Hiscox using AIR Worldwide Corporation's catastrophemodeling software system.

Additional simulation testing of historical loss ratios was alsoconducted on the deal model, Best said, noting that the additionalsimulation resulted in cumulative default probabilities withinacceptable levels to support the assigned debt ratings.

Best said that Hiscox maintains a comprehensive system ofinternal control covering all aspects of risk, adding that Hiscoxutilizes a risk committee, which monitors its risk managementframework, identifies emerging risks and recommends appropriatestrategies, among other things.

With respect to underwriting, the rating agency said thatunderwriters price the risk based on their professional judgment,market experience and recommendation of Hiscox's independent lossmodeling team.

Best noted that a requirement to retain at least 60 percent ofall gross property catastrophe reinsurance business written in 2007gives Syndicate 33 underwriters incentives to produce and retainquality business.

Target business includes U.S. catastrophe excess of loss,European catastrophe excess of loss, Japanese catastrophe excess ofloss, and worldwide accounts where the predominant exposure comesfrom one of those three areas.

Best said Syndicate 33's financial strength rating of “A”(excellent) is a strong indicator of its ability to manage itsobligations.

Moody's and Standard & Poor's announced ratings for the twoloans in early November.

Moody's ratings are “Baa3″ for the $72 million of senior loans(Term A) and “Ba2″ for the other loans (Term B).

At S&P, the ratings assigned were “triple-B-plus” for Term Aand “double-B-plus” for Term B.