Best Affirms Transatlantic Holdings and Subs ‘A’ Ratings of

December 28, 2010

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of new York-based Transatlantic Reinsurance Company, Swiss-based Trans Re Zurich Reinsurance Company Ltd. and Putnam Reinsurance Company.

Best also affirmed the ICR of “bbb” and debt ratings of “bbb” on $750 million 5.75 percent senior unsecured notes due 2015, $350 million 8 percent senior unsecured notes due 2039, as well as the indicative debt ratings of “bbb” on senior unsecured securities and “bbb-” on the subordinated securities under the shelf registration of the parent holding company, Transatlantic Holdings Inc.

The outlook for all of the ratings is stable.

The rating affirmations reflect Transatlantic’s “excellent business profile as a leading international reinsurance organization, with a book of business that is diversified by product line and geography, said Best. “Transatlantic predominately writes casualty-oriented business, and it has a relatively long track record of stable and consistent operating results, which have generated very strong operating cash flows.

“Throughout 2010, the company’s risk-adjusted capital has continued to improve and is currently at its strongest level in recent history. At the consolidated holding company level, debt measures and fixed charge coverage remain at comfortable levels that are commensurate with Transatlantic’s ratings.”

As offsetting factors Best cited its “concerns regarding the soft casualty market, from which Transatlantic derives a significant portion of its premiums as well as reserve adequacy on its casualty-oriented business. In addition, as a casualty writer, Transatlantic has a significant amount of investment leverage; although, this concern is somewhat mitigated based on the company’s investing philosophy.”

Best also noted that the “FSR of ‘A’ (Excellent) and ICR of “a” of Transatlantic Holdings, Inc. Group have been withdrawn and an NR-5 assigned to the FSR and an “nr” to the ICR, since it is no longer utilized for analytical purposes.”

Source: A.M. Best

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