Ratings: QBE Del Istmo, Asia Capital Re, Lloyd’s Syndicate 570 (Atrium)

January 9, 2012

A.M. Best Co. has assigned a financial strength rating of ‘A-‘ (Excellent) and issuer credit ratings of “a-” to Panama-based QBE Del Istmo Reinsurance Inc, Del Istmo Assurance Corp and Liffey Reinsurance Company Limited, which is domiciled in Dublin, Ireland. The outlook assigned to all of the ratings is stable. The ratings reflect QBE Del Istmo, Del Istmo Assurance and Liffey Re’s “solid capitalization levels, overall profitability, disciplined underwriting and an experienced management team with in-depth knowledge of the markets in which the group serves,” Best said. As partial offsetting factors Best cited the “rapid expansion and the risks associated with writing catastrophe business as well as potential changes in the regulatory environment that could negatively impact the group’s ability to write business.” However, Best also noted that “QBE Del Istmo has not experienced any major catastrophe events since 2007 and has limited exposure to ocean front property business.” The rating agency also said “QBE Del Istmo has established an enterprise risk management framework to identify, measure and monitor both existing and emerging risks across its respective businesses and to allocate capital accordingly. The company’s strategy is to focus on the needs of the small to mid-sized market players and to provide customized products, technical expertise and superior customer service to its clients. This strategy has proven successful for the group and is evidenced by its strong working relationships and high client retention levels. Positive rating action may be considered in the long term if QBE Del Istmo maintains strong operating results and capitalization levels. Negative rating action may occur if QBE Del Istmo’s operating results or capitalization deteriorates significantly, if the company experiences rapid expansion, or if there is a change in the regulatory environment that would negatively impact its operations.”

A.M. Best Co. has affirmed the financial strength ratings of ‘A-‘ (Excellent) and the issuer credit ratings (ICR) of “a-” of Singapore-based Asia Capital Reinsurance Group Pte. Ltd. (ACR), Malaysia-based Asia Capital Reinsurance Malaysia Sdn Bhd (ACRM), ACR ReTakaful SEA Berhad and Bahrain-based ACR ReTakaful MEA B.S.C. (c). Best has also affirmed the ICRs of “bbb-” of Singapore-based ACR Capital Holdings Pte. Ltd. and ACR ReTakaful Holdings Limited of the United Arab Emirates. The outlook for all ratings is stable. The rating actions reflect ACR, ACRM, ACR ReTakaful SEA and ACR ReTakaful MEA’s “adequate capitalization, geographically diversified underwriting portfolio and conservative investment practice,” Best said. The rating agency also acknowledged the companies’ “prudent reserving practice. As demonstrated by Best’s Capital Adequacy Ratio, ACR, ACRM, ACR ReTakaful SEA and ACR ReTakaful MEA’s risk-adjusted capitalization levels are expected to remain adequate for fiscal year 2011, despite the losses from the catastrophes that occurred in 2011.” However, Best pointed out that if the “losses from the Thai flooding were to increase and if the actual performances of the companies were to deviate from the provided projections, it could “revise its opinion on the companies’ financial strength and enterprise risk management. ACR, ACRM, ACR ReTakaful SEA and ACR ReTakaful MEA have diversified underwriting books geographically. This is partially attributable to the intercompany retrocession arrangement between all the operating entities. ACRM, ACR ReTakaful SEA and ACR ReTakaful MEA also have technical support from ACR, resulting in similar underwriting, claims management and investment guidelines and practices within the group.” As partial offsetting factors Best cited “the companies’ short operating history and the potential challenges to achieve targeted profitability levels due to the competitive environment in which the companies operate.”

A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 570, both with stable outlooks. Best then said it has withdrawn the ratings “following the merger of the syndicate into Lloyd’s Syndicate 609. Syndicate 570 is managed by Atrium Underwriters Limited (AUL), the ultimate parent of which is Ariel Holdings Ltd. The financial strength of syndicate 570 is supported by the strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates. The withdrawal of the ratings follows the merger of syndicate 570 into Lloyd’s Syndicate 609 for the 2012 year of account. Syndicate 570 has ceased to trade, and risks attaching with effect from 1 January 2012 will be written by syndicate 609, which is also managed by AUL. The composition of the combined portfolio will be broadly unchanged.”

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