A.M. Best Co. has lowered the financial strength rating of Admiral Insurance Co. and its reinsured subsidiary Admiral Indemnity Co. Together, these companies are the flagship operation of W.R. Berkley Corp.’s specialty insurance segment.
The rating reflects the reduced stand-alone balance sheet strength of the Admiral group that followed the planned reallocation of excess capital to other businesses within the W.R. Berkley enterprise, as well as the diminished financial flexibility of W.R. Berkley Corp. These factors fall short of A.M. Best’s balance sheet standards for a “Superior” rating.
In addition, A.M. Best believes that the ability of Admiral Insurance to generate capital may be constrained by heavier dividend requirements to service a greater proportion of holding company debt in the absence of strong earnings from Berkley’s other insurance operations. Finally, the Admiral group’s outstanding operating returns will continue to moderate as prior year reserve redundancies slowly subside and current year margins are constrained by intense competition within its core excess and surplus lines segment.
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