TEXT-S&P Rts Residential Reinsurance 2012 Variable-Rate Nts

Thu Nov 8, 2012 6:14pm EST

NEW YORK (Standard & Poor's) Nov. 8, 2012-- Standard & Poor's Ratings Services said today that it assigned its 'BB+(sf)' and 'BB(sf)' preliminary ratings to the Series 2012-II Class 1 and Class 2 notes, respectively, to be issued by Residential Reinsurance 2012 Ltd. (Res Re 2012). The notes cover losses in the covered area from hurricane, earthquake, severe thunderstorm, winter storm, and wildfire on a per-occurrence basis.

The Class 1 notes will cover losses between the attachment point of $3.650 billion and the exhaustion point of $4.175 billion, and the Class 2 notes will cover losses between the attachment point of $2.800 billion and the exhaustion point of $3.650 billion.

The preliminary ratings are based on the lower of the following: the rating on the catastrophe risk ('BB+' for the Class 1 and 'BB' for the Class 2 notes), the rating on the assets in the reinsurance trust account ('AAAm' for each class of notes), and the risk of nonpayment by the ceding insurer (AA+). The cedants will be United Services Automobile Assn., a reciprocal interinsurance exchange organized under the laws of Texas; USAA Casualty Insurance Co., a Texas corporation; USAA Texas Lloyd's Co., a Texas Lloyd's plan insurer; USAA General Indemnity Co., a Texas-domiciled stock insurance company; Garrison Property and Casualty Insurance Co.; and other affiliates. They will be responsible for the quarterly payment due under the reinsurance agreement with Res Re 2012.

We have previously rated Residential Reinsurance 2012 Ltd. Notes. Series 2012-I Class 3 and Class 5 notes were both issued in May 2012. The Series 2012-1 Class 3 notes have an attachment point of $2 billion and are rated 'BB-(sf)'. The Class 5 notes have an attachment point of $1.571 billion, and are rated 'BB(sf)'.

RATINGS LIST

Residential Reinsurance 2012 Ltd.

Series 2012-II Class 1 notes BB+(sf)

Series 2012-II Class 2 notes BB(sf)

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