A.M. Best Co. has placed under review with negative implications the financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit ratings (ICR) of “a-” of the pooled and reinsured members of the Tower US Pool.
Best also placed under review with negative implications the ICR of “bbb-” as well as the debt rating of “bbb-” on $142.5 million 5.00 percent senior convertible notes, due 2014 of the intermediate holding company, Tower Group Inc.
In addition Best has placed the FSR of ‘A-‘ (Excellent) and ICR of “a-” of Bermuda-based CastlePoint Reinsurance Co. Ltd. under review with negative implications.
All of the companies are owned by Tower Group International Ltd. and are headquartered in New York, N.Y., unless otherwise specified.
Best said the “under review status reflects Tower’s previously issued press release, which announced the postponement of its financial results for the second quarter of 2013.
“Additionally, on August 8, Tower’s second quarter results, including an anticipated prior year loss reserve charge of approximately $60 million to $110 million pre-tax, were announced.
“These rating actions also take into consideration the impact on reserve leverage and the increased uncertainty as respects future reserve charges. However, even at the high end of the reserve charge, risk-adjusted capitalization is expected to remain supportive of the ratings.”
Best added that the “ratings will remain under review pending further discussions between A.M. Best and Tower’s management. The negative implications reflect the reasonable likelihood that the ratings and/or outlook could be downgraded and/or revised, respectively.”
Best summarized the companies affected by its rating actions as follows:
The FSR of ‘A-‘ (Excellent) and ICRs of “a-” have been placed under review with negative implications for the following pooled and reinsured members of Tower US Pool:
•CastlePoint Insurance Company
•CastlePoint National Insurance Company
•Tower Insurance Company of New York
•Tower National Insurance Company
•Preserver Insurance Company
•North East Insurance Company
•Hermitage Insurance Company
•CastlePoint Florida Insurance Company
•Kodiak Insurance Company
•York Insurance Company of Maine
•Massachusetts Homeland Insurance Company
Source: A.M. Best