Ratings Roundup: Mapfre Tepeyac, UFP, Cotswold, Johnston Re

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of Mexico’s Mapfre Tepeyac S.A., both with stable outlooks. The ratings reflect Mapfre Tepeyac’s “solid balance sheet, growing market presence and adequate capitalization,” said Best. The ratings also “recognize Mapfre Tepeyac’s affiliation with its immediate parent, MAPFRE America S.A., including the synergies and operating efficiencies the company enjoys as a group member of MAPFRE S.A., the leading insurer in Spain.” Best noted that Mapfre Tepeyac “writes life and non-life coverages exclusively in Mexico. Business segments include individual and group life, individual and group accident and health, general and professional liability, marine (cargo only), fire and earthquake and automobile. The company’s risk-adjusted capitalization remains adequate for its current business profile, and Mapfre Tepeyac continues to leverage its brand recognition to enhance its market presence and attain scale.” As partial offsetting factors Best cited the company’s “underwriting losses in recent years, the increasingly competitive Mexican insurance market and the company’s reliance on reinsurance to protect its earnings and surplus.”

A.M. Best Co. has assigned a financial strength rating of ‘A-‘ (Excellent) and an issuer credit rating of “a-” to Bermuda-based UFP Insurance Ltd. (UFPIL) and has assigned a stable outlook to both ratings. The ratings of UFPIL reflect its “conservative underwriting leverage, strong level of capitalization and profitable operating results driven by its excellent underwriting performance,” said Best. As partial offsetting factors Best noted UFPIL’s “relatively high retention and limited profile as a single parent captive of Universal Forest Products Inc. (UFP).” The captive provides coverage for general liability, auto liability, workers’ compensation, property and medical stop loss. Best added that FPIL has “maintained very conservative underwriting leverage ratios as surplus has remained strong to support its business volumes. The company has posted low loss and loss adjustment expense ratios, reflecting UFP’s effective risk management. The ratings recognize UFPIL’s balance sheet strength and conservative underwriting leverage measures.”

A.M. Best Co. has assigned a financial strength rating of ‘B+’ (Good) and an issuer credit rating of “bbb-” to British West Indies-based Cotswold Insurance Limited, a downstream subsidiary of Cotswold Group B.V., a Netherlands holding company. Cotswold Group B.V. is ultimately owned by ICZ Holding N.V., a Netherlands company that is publicly traded on the Frankfurt Stock Exchange. The outlook assigned to both ratings is stable. The assigned ratings “reflect Cotswold’s niche business profile as an offshore provider of private placement life insurance and disability products to the high net worth marketplace and its plans to expand its product line and target markets to include selling property/casualty products (including political risk) in certain Latin American countries,” Best explained. The ratings also recognize Cotswold’s “relatively modest levels of liquidity and investment risk within its life and disability product lines. Additionally, Cotswold currently maintains modest levels of insurance risk (primarily guaranteed minimum death benefit) and sufficient risk-adjusted capital.” As partial offsetting factors Best cited Cotswold’s “limited operating profile; high ratio of intangibles-to-capital; reputational risk associated with detecting anti-money laundering (AML) activities, a common concern with respect to offshore insurance providers; and risks to its business profile from unanticipated changes to international tax law and international investment treaties. Additionally, the company’s plans to expand into Ecuador and other Latin American countries pose a unique set of risks including higher political capital markets and regulatory risk related to developing economies that may be unpredictable.” Best noted that Cotswold “attempts to mitigate these risks through sound risk management policies geared toward detecting AML, its good corporate governance practices and seasoned management team. While current capitalization levels are adequate, the company’s planned expansion into political risk and various property/casualty lines may require additional levels of capital going forward.”

Standard & Poor’s Ratings Services today said it assigned its ‘BB- (sf)’ ratings on the Series 2011-1 Class A and B notes issued by Johnston Re Ltd., a special-purpose Cayman Islands exempted company licensed as a Class B insurer. HSBC Bank (Cayman) Ltd., as share trustee, holds all of Johnston Re’s issued and outstanding shares in trust for charitable or similar purposes. The ceding reinsurer is Munich Reinsurance America Inc. (Munich Re America; AA-/Stable/–). Munich Re America will be responsible for the premium payments due under the retrocession agreement in place between Munich Re America and Johnston Re. Johnston Re will cover losses on a per-occurrence basis due to hurricanes. Covered losses will not be directly linked to Munich Re America’s exposure in the covered area (North Carolina), rather they will be based on the losses of the North Carolina Joint Underwriters Assn. (NCJUA) and the North Carolina Insurance Underwriters Assn. (NCIUA).

Topics North Carolina Mexico