Ratings Recap: SCOR (US), Majestic

May 2, 2011

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit ratings of “a” of the life and non-life North American operating subsidiaries of France’s SCOR SE with stable outlooks, following the announcement of its acquisition of the life mortality business of Transamerica Re (TARe). In Best’s opinion the deal “will strengthen SCOR’s global reinsurance position and will enable the North American operating subsidiaries to enjoy a leading position in the U.S. life reinsurance market.” Best added that the rating affirmations “reflect the implicit and explicit support of SCOR for the North American life subsidiaries, as well their strong stand-alone business profile, capitalization and improving operating performance. The North American life subsidiaries should also benefit from the TARe transaction, which should strengthen SCOR’s product portfolio that concentrates on its traditional life mortality business and benefits from operating efficiencies.” As partial offsetting factors Best cited “the elevated use of letters of credit associated with the funding requirements associated with securing reserve credit for Regulation XXX redundant reserves.” Best added that in its opinion “the future XXX funding for new business is manageable. Best summarized the companies affected by the ratings action as follows:
The FSR of ‘A’ (Excellent) and ICRs of “a” have been affirmed for the following life and non-life North American operating subsidiaries of SCOR SE:
— SCOR Global Life U.S. Re Insurance Company
— SCOR Global Life Reinsurance Company of America
— SCOR Global Life Re Insurance Company of Texas
— SCOR Reinsurance Company
— SCOR Canada Reinsurance Company
— General Security Indemnity Company of Arizona
The FSR of ‘A-‘ (Excellent) and the ICR of “a-” have been affirmed for General Security National Insurance Company.

A.M. Best Co. has downgraded the financial strength rating (FSR) to ‘E’ (Under Regulatory Supervision) from ‘B’ (Fair) and issuer credit rating (ICR) to “rs” from “bb+” of California’s Majestic Insurance Company, and has removed the ratings from under review with negative implications. Best also downgraded the FSR to ‘C+’ (Marginal) from ‘B’ (Fair) and ICR to “b-” from “bb+” of Twin Bridges (Bermuda) Ltd. In addition Best has downgraded the ICRs to “c” from “b” of both companies’ ultimate parent, Bermuda-based Majestic Capital, Ltd., as well as Majestic Capital’s intermediate holding companies, Embarcadero Insurance Holdings, Inc. and Majestic USA Capital, Inc., which is headquartered in Delaware. Best also downgraded the debt ratings to “d” from “ccc+” on the trust preferred securities of Majestic USA and Embarcadero. All the above ratings are under review with negative implications, with the exception of Majestic Insurance, until further discussions are held with management or future business plans are finalized. Best acknowledged that the rating actions “follow the announcement that the California Department of Insurance has issued an order of conservation for Majestic, effective April 21, 2011.”

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