Best Affirms Ratings of Catlin Group Limited’s U.S. Subsidiaries

September 14, 2012

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit ratings of “a” of Catlin Insurance Company, Inc. (CICI), which is based in Houston, Catlin Specialty Insurance Company (CSIC) and Catlin Indemnity Company (CID), both of which are based in Delaware.

The outlook for all of the ratings is stable. All companies are ultimately owned by the Bermuda-based Catlin Group Limited (CGL). In a separate ratings announcement Best confirmed all of those ratings.

These ratings are based upon Best’s criteria “Rating Members of Insurance Groups” and “take into consideration CICI, CSIC and CID’s roles and strategic importance within the Catlin group,” said the bulletin. “In addition, the ratings consider the implicit and explicit support provided by the Catlin group in the form of quota share reinsurance by Catlin Re Switzerland Ltd. through its Bermuda branch and a guarantee on all third-party reinsurance recoverables by CGL. The ratings also reflect the implied commitment provided by the Catlin group going forward to support its ongoing expansion efforts in the United States.”

Best also explained that CSIC, CICI and CID “participate in the Catlin U.S. intercompany pooling agreement. This arrangement “maintains solid risk-adjusted capitalization, has produced strong operating results and remains a growth engine for the Catlin group.

“However, due to the fact that the vast majority of the premium and exposure growth has taken place in the casualty lines during the recent soft market conditions,” Best added that it would “continue to closely monitor the reserve development and overall profitability of the Catlin US Pool going forward.

“Positive rating actions are unlikely in the near future for CSIC, CICI and CID.

“Factors that may lead to negative rating actions include a material deterioration in risk-adjusted capitalization, significant weakening in operating results, any negative rating actions taken on CGL and/or any lessening of support (implied or explicit) provided to the U.S. insurance subsidiaries by CGL.”

Source: A.M. Best

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