A.M. Best Co. announced that the “A+” (Superior) financial strength rating of the St. Paul Companies is unaffected by The St. Paul’s decision to transfer its traditional reinsurance operations to a newly formed Bermuda-based reinsurer, Platinum Underwriting Holdings Ltd., in which St Paul will have a 24.9 percent stake. The remaining 75 percent will be floated via an Initial Public Offering (IPO), which is expected to close in about three months. Platinum will write property and casualty reinsurance on a worldwide basis through operating subsidiaries in the U.S., U.K. and Bermuda.
A.M. Best believes that the transfer of the reinsurance business to Platinum will free up capital at the St. Paul Companies necessary to support its other existing businesses, given the loss of surplus in 2001. In addition, the removal of the reinsurance business will reduce the volatility of St. Paul’s earnings, absent further reserve charges.
Platinum will reinsure St. Paul Fire and Marine Insurance Co. (St. Paul Fire & Marine) and St. Paul Reinsurance Co. Ltd. (St. Paul Re UK) for certain reinsurance contracts incepting in 2002. In the meantime, A.M. Best continues to regard St. Paul Re UK as core to the St. Paul group as all its policies fall under the terms of the unconditional guarantee provided by St. Paul Fire & Marine, which is to remain in place.
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