A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and the issuer credit rating (ICR) of “a-” of Torus Specialty Insurance Company, formerly known as Praetorian Specialty Insurance Company, and has assigned a stable outlook for both ratings.
Best’s action removes the under review with negative implications applied to Praetorian Specialty on October 1, 2008, following the agreement of Torus Insurance Holdings Limited to acquire the company from its immediate parent, Praetorian Insurance Company, a subsidiary of QBE Insurance Group Limited. Following the purchase, the company changed its name to Torus Specialty Insurance Company.
Best noted: “Torus Specialty was effectively acquired as a shell company with Praetorian reinsuring all underwriting liabilities in respect of contracts written prior to the company’s purchase by Torus.”
QBE also provides a comprehensive guarantee on all Torus Specialty liabilities relating to the period prior to the company’s purchase and against the failure of Praetorian to meet its reinsurance obligations to Torus Specialty.
The lines of business written by Torus Specialty will be comparable to the lines written by other Torus operating entities, which include commercial property, onshore and offshore energy, construction, power utility and general casualty.
Best said it “anticipates that Torus Specialty will maintain strong risk-adjusted capitalization, based on conservative performance expectations. The company was initially capitalized at $50 million provided by Torus Insurance (Bermuda) Limited. The greater part of the company’s risk will be ceded to Torus Insurance (UK) Limited (Torus UK) through a 65 percent quota share agreement and a stop loss contract. Torus UK benefits from similar reinsurance arrangements with Torus Bermuda, the main risk-bearing company for the group.”
Best expects the Company “to produce good financial results supported by hardening rates in catastrophe-exposed classes. Additionally, Torus Specialty will benefit from the engineer site evaluations and technical pricing models that are embedded in the group’s underwriting process.
“Partially offsetting this is Torus Specialty’s developing market profile. Torus Specialty will form the US trading operation of the Torus group, which started underwriting business in June 2008 and faces the considerable challenge of successfully growing its business profitably.”
Source: A.M. Best – www.ambest.com
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