Ratings Roundup: Wind River, InnovAssur, Radius

June 20, 2013

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Bermuda-based Wind River Reinsurance Company, Ltd. and its U.S. subsidiaries. Best has also affirmed the ICR of “bbb” of the ultimate parent holding company of Wind River Re, Global Indemnity plc, based in Dublin, Ireland. In addition Best affirmed the indicative ratings on the shelf registration of “bbb” on senior unsecured debt, “bbb-” on subordinated unsecured debt and “bb+” on preferred stock of Global Indemnity. The outlook for all ratings is stable. At the same time, Best withdrew the FSR of ‘A’ (Excellent) and ICR of “a” of Indiana-based United National Casualty Insurance Company “as Global Indemnity amended its pooling arrangement as United National Casualty was removed from the pool.” Best said the ratings “take into account Global Indemnity’s strong first quarter 2013 earnings announcement, the group’s solid capitalization, strong historical operating performance and diversified portfolio of specialty product offerings in the United States and reinsurance in Bermuda via Wind River Re. The U.S. subsidiaries of Global Indemnity operate under a single pooling agreement, whereby they pool their premiums and liabilities and cede 50 percent of their combined net retained liabilities to Wind River Re. Wind River Re also continues to maintain a book of unaffiliated, third-party reinsurance to complement the affiliated business.” As partial offsetting factors Best cited “the recent deterioration in the group’s specialty insurance operations in the United States and its continued investment challenges associated with low new money yields. While attritional underwriting results improved in 2012, severe weather events, such as Superstorm Sandy in 2012 and Hurricane Irene in 2011 were contributing factors to the organization’s recent earnings shortfalls.” In conclusion Best said: “Factors that may lead to positive rating actions include Wind River Re generating operating performance measures that exceed industry sector averages, maintaining strong levels of risk-adjusted capitalization, reserve stability and the ability to meet projections. Factors that may lead to negative rating actions include any material decline in the organization’s risk-adjusted capitalization, a continuation of below expected operating results and/or deterioration in reserves.” Best’s report named the following companies as affected by its rating actions:
The FSR of ‘A’ (Excellent) and ICRs of “a” have been affirmed for Wind River Reinsurance Company, Ltd. and its following subsidiaries:
• Diamond State Insurance Company
• Penn-America Insurance Company
• Penn-Patriot Insurance Company
• Penn-Star Insurance Company
• United National Insurance Company
• United National Specialty Insurance Company

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and the issuer credit rating of “a-” of Quebec’s InnovAssur, assurances generals inc., both with stable outlooks. In a concurrent action Best withdrew the ratings of InnovAssur as its management has requested that this entity no longer participate in Best’s interactive rating process. Best said the ratings for InnovAssur “recognize its strong risk-adjusted capitalization, profitable operating performance and favorable business environment. These strengths are partially offset by the company’s geographic and product line concentration and its single distribution channel.”

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a” of Cayman Islands-based Radius Insurance Company, both with stable outlooks. Radius’ ratings are based on its “excellent capitalization, history of profitable business written from a predecessor captive, as well as the position it holds as the captive insurer for its ultimate parent, Phillips 66,” Best explained. “The ratings also consider the level of commitment on the part of Phillips 66, whose management incorporates Radius as a core element in its overall risk management program.” As partial offsetting factors Best cited “Radius’ exposure to large losses due to the limits offered on its policies as well as its significant dependence on reinsurance protection.” Best’s report also noted that the business that will be written by Radius “has a history of strong underwriting results and operating returns. The company’s loss experience has remained favorable due in part to the strong loss control programs at the parent. Phillips 66 will conduct periodic reviews of Radius’ potential loss exposures through a specialist in industrial risks. A single occurrence could result in a large loss that approaches Radius’ limits; however, the company has the capital to fund claims in the event of a reinsurance recovery problem. Key rating triggers that could result in positive rating actions would be Radius generating consistent net income, limited losses and meeting and/or exceeding its business plan over the long term. Key rating triggers that could result in negative rating actions would be Radius generating consistent net losses, numerous large claims and/or not executing its business plan over the long term.”

Topics USA

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