LONDON, 8 May 2004 — Standard & Poor’s Ratings Services said yesterday it assigned its ‘A-’ long-term counterparty credit and insurer financial strength ratings to the National Company for Cooperative Insurance (NCCI) of Saudi Arabia. The outlook is stable.

The ratings reflect the following credit strengths:

• Quality of management at all levels, a distinctly positive rating factor;

• NCCI’s strong competitive position as the only licensed insurer currently in the Kingdom. Competitors operate from offshore, while NCCI already meets the main requirements of the exacting new domestic regulatory regime;

• Potential for growth. The marketplace is set for rapid premium expansion as government initiatives to extend compulsory motor and health insurance create new opportunities, allowing the company to benefit from its established retail infrastructure and brand; and

• Very strong capitalization, well able to underpin financial strength under all realistic scenarios.

These positive factors are somewhat offset by the following weaknesses:

• Unproven ability to sustain profitable growth in a rapidly evolving marketplace, particularly for health cover;

• Substantial exposure to equity investments, which increases potential volatility of asset values; and

• Changes to the regulatory environment, which introduce some short-term uncertainty as larger foreign insurers indirectly active in the Kingdom are now obliged to prepare to operate directly through locally incorporated subsidiaries or joint ventures.

“The stable outlook reflects Standard & Poor’s expectation that NCCI’s competitive position and capitalization will continue to be primary rating strengths,” said Standard & Poor’s credit analyst Kevin Willis.

Standard & Poor’s expects that NCCI’s capitalization will remain very strong, driven principally by the capital adequacy ratio and supported by the financial flexibility available to the company, particularly in the form of partly paid shares.

NCCI’s competitive position in the Saudi market will remain at least strong, although the uncertainties currently affecting market development calls for a degree of caution until a new and sustainably successful track record is established.

Operating performance will remain good, with a combined ratio below 100 percent and average ROE of 10 percent. The impact on both loss and expense ratios of very rapid policy volume growth remains untested.