A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of Puerto Rico-based QBE Optima Insurance Company, both with stable outlooks. The ratings of QBE Optima reflect its “solid risk-adjusted capitalization, profitable operating earnings and the explicit and implicit support provided by its ultimate parent, QBE Insurance Group Limited,” Best explained. The support also includes QBE’s captive reinsurance affiliate, Equator Reinsurances Limited. The ratings also reflect the “benefits provided by QBE Optima’s affiliated insurance agency, Colonial Insurance Agency, which provides QBE Optima with access to business with demonstrated loss experience that should support profitable growth.” Best also noted that “QBE’s support includes expert investment guidance, information technology support, potential savings through common services and significantly improved financial flexibility to support its growing operations, which should all yield tangible benefits to QBE Optima. Equator Re provides considerable quota share reinsurance support to QBE Optima’s guaranteed automobile protection, automobile physical damage and personal lines as well as property lines of business. Equator Re’s reinsurance support to QBE Optima has expanded during 2013 to include additional coverage for property catastrophe and casualty insurance exposures.” Best said the outlook recognizes what it believes are “reasonable projections for QBE Optima, which should help further fortify its capitalization and support its efforts to continue to grow its operation.” In conclusion Best said: “Factors that could lead to positive rating actions for QBE Optima would be improved underwriting and operating results, enhanced balance sheet strength, along with a discernible boost in its business profile from being a part of the QBE organization. Negative rating actions could result from material deterioration in the profitability of maturing accident years, which could possibly lead to a notable decline in the company’s balance sheet strength, or from a lessening of support provided by QBE.”
A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a+” of Aviva Insurance Company of Canada and its affiliates, Elite Insurance Company, Traders General Insurance Company, Pilot Insurance Company, Scottish & York Insurance Company, Limited and S&Y Insurance Company. The outlook for the FSR is stable, while the outlook for the ICRs is negative. The companies listed are insurance subsidiaries of their ultimate parent company, UK-based AVIVA plc. The Canadian operating entities are managed as one entity through common management and have solid brand name recognition marketing under the Aviva name.” Best said the “ratings acknowledge the importance of Aviva Insurance Company of Canada and its affiliates to the AVIVA plc organization and the explicit and implicit support derived from this relationship. Furthermore, the ratings reflect the leading position of Aviva Insurance Company of Canada and its affiliates in the Canadian property/casualty market along with their continued strong operating performance and solid risk-adjusted capital position.” As offsetting factors Best cited the “companies’ strong competition for market share and exposure to the challenging auto markets in certain parts of Ontario.” In conclusion Best said: “Positive rating movement is unlikely at present. Negative rating actions could occur if AVIVA plc’s financial leverage was to remain elevated, risk-adjusted capitalization was to deteriorate significantly, and/or financial results were negative in the coming financial periods.”
A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘A’ (Excellent) and the issuer credit rating of “a+” of Lloyd’s Syndicate 609, which is managed by Atrium Underwriters Limited (AUL). The outlook for both ratings remains positive. Best then said that it has withdrawn the ratings in response to management’s request to no longer participate in Best’s interactive rating process. Best said the syndicate’s ratings “reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates. AUL’s parent, Atrium Group Underwriting Ltd, provides 25 percent of syndicate 609’s capacity in 2013 through its Lloyd’s corporate member, Atrium 5 Limited. The remaining capacity is provided by third party capital providers, largely traditional Lloyd’s names. In addition, the ratings factor in the syndicate’s specialist business profile and track record of producing excellent results, as demonstrated by a five-year historical combined ratio of 81 percent.” Best also noted that in “2012, the syndicate produced an excellent pre-tax profit of £60 million [$96 million] and a combined ratio of 72 percent, reflecting the strong result of the syndicate’s marine, aviation and transport division. Syndicate 609 has a strong business profile within the Lloyd’s market as a specialist insurer of property and casualty risks, with a significant US focus. For the 2012 year of account, Lloyd’s Syndicate 570 (also managed by (AUL) merged with syndicate 609. The final open year of account of syndicate 570 is expected to close into syndicate 609 at the end of 2013, in line with normal underwriting year of account practices.”
A.M. Best Europe – Rating Services Limited has affirmed the financial strength rating of ‘B+’ (Good) and issuer credit rating of “bbb-” of Pakistan’s Adamjee Insurance Company Limited, both with stable outlooks. “The ratings of Adamjee reflect its solid risk-adjusted capitalization and strong franchise within the Pakistani market,” Best said. As offsetting factors Best noted “Adamjee’s weakening technical performance and its investment portfolio with a concentration in affiliated holdings.” Best said: “Adamjee’s risk-adjusted capitalization remains solid following the actions taken by the company to control growth and to gradually de-risk its asset profile away from affiliated investments. Furthermore, Adamjee’s capital position is sufficiently protected on a 1 in 250 year catastrophe stressed basis, ensuring there is no overspill from the reinsurance program. In addition Best noted that “Adamjee maintains a strong competitive position in Pakistan with a 22 percent market share. The company has a diversified underwriting portfolio, enhanced by the recent introduction of life business, and approximately 20 percent of its business emanates from the United Arab Emirates. Adamjee’s technical performance has weakened in 2011 and 2012 with combined ratios above 100 percent, driven by higher loss experience for property business.” However, best also indicated that “performance is expected to improve following enhanced risk selection and tighter underwriting controls, with technical performance expected to break-even for 2013. Volatility in Adamjee’s overall earnings is created by its high concentration of assets in local equities, in particular, the affiliated MCB Bank. Upward rating movement is unlikely at present. Negative rating pressure could arise from a material reduction in Adamjee’s risk-adjusted capitalization or if the political and economic conditions in Pakistan were to deteriorate.”
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