Best Upgrades Ratings of Sirius America Insurance Company

October 11, 2011

A.M. Best Co. has upgraded the financial strength rating to ‘A’ (Excellent) from ‘A-‘ (Excellent) and the issuer credit rating to “a” from “a-” of New York-based Sirius America Insurance Company, formerly known as White Mountains Reinsurance Company of America.

Best also upgraded the ICR to “bbb” from “bbb-” and debt ratings to “bbb” from “bbb-” on $400 million 6.375 percent senior unsecured notes, due in 2017 and to “bb+ from “bb” on $250 million floating rate preferred non-cumulative securities of the Bermuda-based Sirius International Group, Ltd., formerly known as White Mountains Re, Ltd.

The outlook for all of the ratings is stable.

Best explained that the ratings of Sirius America “reflect the strategic importance of the U.S. operating company to Sirius International Group, its excellent level of risk-adjusted capitalization and enhanced market profile and risk management strategy,” as a wholly owned subsidiary of Sirius International Insurance Corporation (publ), based in Stockholm, Sweden. (see article in international section)

In addition Best explained that in September 2011, White Mountains Insurance Group Ltd. (the entire organization’s ultimate parent) “announced the reorganization of the reinsurance arm of its business. Regulatory approvals have been received and all reinsurance operating entities will be consolidated under Sirius.

“Sirius will be the lead operating entity of the Sirius International Group with Sirius America as a wholly owned subsidiary. The reorganization is expected to improve capital and tax efficiency across the group, as well as enhance the diversification of the overall Sirius’ portfolio. Sirius’ regulatory capital is expected to increase as a result of the reorganization.”

Best added that, as a result of these global strategies, “Sirius America has improved its overall performance for the first half of 2011; however, a positive long-term trend has yet to be established. The favorable underwriting results, along with net realized capital gains increased the overall capital for the company. Parental support is provided through capital maintenance and aggregate stop loss agreements. Offsetting these positive rating factors is the volatility in Sirius America’s historical operating performance. In 2010, the company incurred significant losses from the Chilean earthquake.”

Source: A.M. Best

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