Attorneys’ Liability Assurance Society Lowered

August 5, 2002

Fitch Ratings has lowered its insurer financial strength rating on Attorneys’ Liability Assurance Society (Bermuda) Ltd. (ALAS) to ‘AA-‘ from ‘AA’. The Rating Outlook is Stable.

Fitch’s rating action reflects its belief that due primarily to intense competition and cyclical market challenges evident the past several years in the professional liability markets, that it is no longer consistent with Fitch’s rating parameters to rate a monoline professional liability insurer at the ‘AA’ rating level.

Thus, the rating action better aligns ALAS’ rating with those of peer companies within Fitch’s rating universe, a significant number of whom have also been downgraded in the past 12-18 months, to reflect Fitch’s more negative long-term macro views in the commercial property/casualty sector.

Fitch’s very strong insurer financial strength rating on ALAS continues to reflect the company’s good competitive position and strategy in its chosen market, exceptionally strong capital position, comprehensive reinsurance protection and high-quality investment portfolio.

Fitch believes that ALAS’ competitive position and operating profile will benefit from the current hard market conditions. However, Fitch also believes that ALAS’ experience during the prolonged soft market of the mid-to-late 1990’s demonstrates the impact of market conditions on the company’s operating profile. During this period, ALAS’ underwriting profitability declined and the company found it difficult to attract new member firms. In addition, claim severity has been increasing, reflective of overall trends in the lawyers’ liability market.

Fitch believes that ALAS’ investment portfolio is well managed and that its credit quality is good.

Was this article valuable?

Here are more articles you may enjoy.

From This Issue

Insurance Journal West August 5, 2002
August 5, 2002
Insurance Journal West Magazine

2002 Program Directory, Vol. I