A.M. Best Revises Outlook to Positive for Casiopea Re S.A.

OLDWICK, N.J.--(Business Wire)--
A.M. Best Co. has revised the outlook to positive from stable and affirmed the
financial strength rating of A- (Excellent) and the issuer credit rating of "a-"
of Casiopea Re S.A. (Casiopea Re) (Luxembourg), the reinsurance company of
Telefónica S.A. (Telefónica) (Spain).

The revised outlook reflects the company`s solid level of risk-adjusted
capitalisation, stable underwriting performance and the increasing significance
of Casiopea Re to Telefónica, whose financial position is also improving.

A.M. Best believes that Casiopea Re`s level of risk-adjusted capitalisation
remains excellent and is well supported by a consistently profitable
underwriting account. A change in investment profile during 2008, away from
listed equities and towards intra-company loans and bonds, increased investment
concentration risk and marginally decreased Casiopea Re`s level of risk-adjusted
capitalisation. However A.M. Best considers that it has remained supportive of
the current rating level.

Casiopea Re`s business profile has increased significantly in recent years with
gross premium income increasing from EUR 36.7 million in 2006 to EUR 109.1
million in 2008. A.M. Best believes that this demonstrates Casiopea Re`s
importance to Telefónica, which has itself demonstrated an improved financial
strength during 2008.

A.M. Best believes that if Casiopea Re is able to maintain its solid capital
strength, stable underwriting performance and increasing significance to
Telefónica over the next two years, a rating upgrade is likely. However, a
deterioration in any of these factors or a decline in the financial position of
Telefónica is likely to have a negative influence over the current rating level
and outlook.

For Best`s Credit Ratings, an overview of the rating process and rating
methodologies, please visit www.ambest.com/ratings.

The principal methodologies used in determining these ratings, including any
additional methodologies and factors that may have been considered, can be found
at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is a global full-service credit rating
organization dedicated to serving the financial and health care service
industries, including insurance companies, banks, hospitals and health care
system providers. For more information, visit www.ambest.com.

A.M. Best Co.
Analysts
Timothy Prince, +(44) 20 7626 6264
timothy.prince@ambest.com
or
Carlos Wong-Fupuy, +(44) 20 7626 6264
carlos.wong-fupuy@ambest.com
or
Public Relations
Jim Peavy, +(1) 908 439 2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, +(1) 908 439 2200, ext. 5378
rachelle.morrow@ambest.com

Copyright Business Wire 2009