Best Affirms Platinum Underwriters and Subs Ratings; Outlook Stable

April 26, 2013

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Platinum Underwriters Bermuda, Ltd. and its strategic affiliate, Platinum Underwriters Reinsurance, Inc. , headquartered in Baltimore, Maryland.

Best also affirmed the ICR of “bbb” and debt ratings of Platinum Underwriters Holdings, Ltd. (Bermuda), (collectively referred to as Platinum) as well as the debt ratings of Delaware-based Platinum Underwriters Finance, Inc.

The outlook for all of the ratings is stable.

Best said the ratings “reflect the group’s excellent risk-adjusted capitalization, stable management team, focused business strategy, which strictly emphasizes cycle management, and overall enterprise risk management capabilities. The ratings also consider the organization’s market profile and low financial leverage.

“For full year 2012 and the first quarter of 2013, Platinum reported solid operating performance. In the fourth quarter of 2012, Platinum easily absorbed losses from Superstorm Sandy, which struck the northeastern part of the United States.

“This comes on the back of 2011, when Platinum experienced significant catastrophe losses, which resulted in a sizeable net operating loss but only a modest reduction in capital. In the quarters that have followed 2011, Platinum continues to execute its resolute cycle management strategy on its simple, yet efficient, operating platform while generating strong historical long-term returns and maintaining excellent risk-adjusted capitalization.”

As an offsetting factor Best cited “Platinum’s steadfast cycle management strategy may someday impede its ability to take optimum advantage of future market opportunities as they arise. While it may still be too early to fully evaluate the impact of such a strategy across the entire business cycle,” Best said it would “continue to monitor the organization’s business profile and market position with regard to significant rating considerations.

“Factors that could lead to a downgrading of Platinum’s ratings or a revision of its outlook to negative include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to expectations and peers, significant adverse loss reserve development and/or a material decline in risk-adjusted capital.

“Alternatively, factors that could lead to an upgrading of the company’s ratings include sustained, long-term favorable operating profitability, coupled with maintenance of strong risk-adjusted capital levels.”

Best summarized the ratings affected by its actions as follows:
The following debt ratings have been affirmed:
Platinum Underwriters Finance, Inc.—(guaranteed by Platinum Underwriters Holdings, Ltd.)
— “bbb” on $250 million 7.50 percent senior unsecured notes, due 2017

The following indicative ratings available under the shelf registration have been affirmed:
Platinum Underwriters Holdings, Ltd.—
— “bbb” on senior unsecured debt
— “bbb-” on subordinated debt
— “bb+” on preferred stock

Source: A.M. Best

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