A.M. Best Europe – Rating Services Limited has removed from under review with negative implications and affirmed the financial strength rating of ‘B+’ (Good) and issuer credit rating of “bbb-” of Société Tunisienne de Reassurance (Tunis Re), and has assigned both ratings a stable outlook. Best said the rating actions reflect Tunis Re’s “strong risk-adjusted capitalization and good resilience in the context of the recent unrest in Tunisia.” Best noted that the reinsurer’s “day-to-day operations have not been significantly affected, and the company has been able to increase its volume of business written in the first quarter of 2011. Net claims generated by the unrest, part of which have been accounted for in the 2010 accounts, remained at a limited level thanks to the effective retrocession plan in place. Furthermore, the situation in Tunisia has been improving since January, as the country now has a transition government in place, with elections expected to occur before the end of July.” Best said the stable outlook “reflects the more challenging environment that Tunis Re is now facing as a result of the Arab spring, which impacted the Middle East as a whole and led the company to revise its growth plan and postpone its capital raising that was initially planned for the first quarter of 2011.”
A.M. Best Co. has assigned a debt rating of “bb+” to the $230 million 7.5 percent Series B preferred shares of Bermuda’s Endurance Specialty Holdings, Ltd. with a stable outlook. “The proceeds from the issuance will be used by Endurance for general corporate purposes, including the repurchase of outstanding debt,” said Best. “The company’s debt-to-adjusted capital ratio and rolling three-year fixed charge coverage remain comfortably within the range that is commensurate with the assigned rating. Endurance was formed in 2001 and owns several diversified specialty insurance and reinsurance companies. The company has operations in Bermuda, Europe, the United States and Latin America.”
A.M. Best Co. has downgraded the financial strength rating to ‘B-‘ (Fair) from ‘B’ (Fair) and issuer credit rating to “bb-” from “bb” of New Zealand Local Authority Protection Program Disaster Fund (LAPP), and has assigned a negative outlook to both ratings. Best has also withdrawn the ratings at the company’s request. Best explained that the ratings “reflect LAPP’s vulnerable capital position, its inability to withstand another catastrophe and the limited coverage available for members’ assets until July 1, 2011.” In addition Best noted that the “LAPP trustees may at any time raise the funds they need from members to meet claims and that trustees also have the discretion to decline claims.” Best said the rating outlook is “based on the premise that as a disaster protection fund, LAPP’s capitalization level generally is not expected to deteriorate. Although the Fund is currently financially vulnerable, trustee resolution to significantly increase contribution levels is anticipated to rapidly strengthen capitalization.”
A.M. Best Europe – Rating Services Limited has downgraded the financial strength ratings to ‘B’ (Fair) from ‘B+’ (Good) and the issuer credit ratings to “bb” from “bbb-” of Luxembourg-based captive insurer Electro Re S.A. and Vermont-based First Beacon Insurance Company (FBIC), and has revised its outlook on both ratings to stable from negative. Best has also withdrawn the ratings at the companies’ request. “The ratings of Electro Re reflect its weakened risk-adjusted capitalization and reduced financial independence due to its inclusion in a cash-centralizing mechanism by the ultimate parent, Alcatel-Lucent,” Best explained. Furthermore, the non-investment grade credit rating of Alcatel-Lucent continues to place pressure on Electro Re’s own ratings. In addition Best noted that in 2010, Electro Re “acquired a sister captive insurer within the Alcatel-Lucent group,” when it “purchased 100 percent of the shares of FBIC from the parent. This transaction was paid for via a cash transfer from Electro Re. FBIC’s new immediate parent, Electro Re, is a major driver behind the Vermont-based captive’s rating.” Best added that it believes that “FBIC’s business profile is weak. Finally, it is very likely that FBIC will also be included in the group wide cash-centralizing program.
A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘B++’ (Good) and the issuer credit rating of “bbb+” of United Arab Emirates-based National General Insurance Company (P.S.C.) (NGI), both with stable outlooks. Both ratings “continue to be supported by the company’s very strong risk-adjusted capitalization, long track record of generating sound technical profits and its developing franchise in the UAE,” said Best. As an n offsetting factor the rating agency noted “the company’s volatile investment returns. NGI ranks as a medium-sized composite insurer in the region and continues to achieve growth,” Best continued. “The company is currently embarking on a co-branded venture with Aviva plc, which in addition to NGI’s own efforts in developing distribution channels, should help maintain NGI’s position and support future growth.” Best added that in its opinion, “NGI’s risk-adjusted capitalization is very strong with sufficient room to absorb planned growth over the next two years. The company has demonstrated good internal capital generation ability, with a long track record of generating sound returns, supported by consistently good underwriting performances. However, A.M. Best notes that overall earnings are affected by volatility in investment income.”
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