At the same time that it affirmed its ratings on the Catlin Group A.M. Best also 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 (CIND), both based in Delaware. CICI, CSIC and CIND participate in the Catlin U.S. intercompany pooling agreement known as the Catlin U.S. Pool and are ultimately owned by the Bermuda-based Catlin Group Limited (CGL). The outlook for all of the ratings is stable. Best said the “ratings are based upon CICI, CSIC and CIND’s strategic roles and importance as U.S. domestic insurers within the Catlin group. In addition, the ratings factor in the explicit and implicit support provided to the Catlin group in the form of quota share reinsurance with 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 to support the Catlin U.S. Pool’s ongoing expansion efforts in the United States.” Best also described the Catlin U.S. Pool as maintaining “a solid risk-adjusted capitalization,” which “produces profitable operating results and continues to expand its role as a growth engine for the Catlin group.” However, Best noted that “due to the vast exposure and premium growth that has taken place in the casualty lines through the recent soft market conditions.” It is continuing to “closely monitor the reserve development and overall profitability of the Catlin U.S. Pool.” In conclusion Best said: “Positive rating actions are unlikely in the near future for CSIC, CICI and CIND. Factors that may lead to negative rating actions include a material deterioration in the Catlin U.S. Pool’s risk-adjusted capitalization, significant weakening in its operating results, any negative rating actions taken on CGL and/or any lessening of support (implied or explicit) provided by CGL.”
A.M. Best Co. has affirmed the financial strength rating of ‘C’ (Weak) and issuer credit rating of “ccc” of Louisiana-based LEMIC Insurance Company, both with negative outlooks. Best concurrently withdrew the ratings due to management’s request to no longer participate in Best’s interactive rating process. “The ratings reflect LEMIC’s unfavorable underwriting and operating performance driven by adverse loss reserve development in recent years, which culminated in a 44 percent decline in policyholder surplus as well as a significant deterioration in its risk-adjusted capitalization in 2012,” Best explained.
A.M. Best Co. has revised the outlook to negative from stable and affirmed the issuer credit ratings (ICR) of “bbb+” of Florists’ Mutual Insurance Company and its reinsured subsidiary, Florists’ Insurance Company (collectively known as Florists’). Best also affirmed the financial strength rating (FSR) of ‘B++’ (Good) of both companies. The outlook for the FSR is stable. Both companies are domiciled in Edwardsville, Illinois. The revised outlook for the ICRs is “a reflection of Florists’ continuing sub-par operating results since 2009 and reflects the likelihood that this rating may be downgraded if this trend continues into 2013,” Best explained. “The rating actions also recognize the recent deterioration in Florists’ risk-adjusted capitalization as well as the continuing challenges facing Florists’ as it pertains to weaker than anticipated experience in the California workers’ compensation segment and reserve strengthening in that line. This follows years of Florists’ unfavorable property experience in 2009, 2010 and 2011, as well as inadequate pricing in select workers’ compensation accounts.” However, Best added that “despite the revised outlook for the ICRs, the ratings acknowledge Florists’ adequate (albeit weakened) capitalization and its leading market position as a provider of insurance solutions to the horticulture industry. Similarly important is Florists’ 2013 projections, which take into consideration the future benefits to be derived from the various actions taken by management in 2012 that are expected to restore profitability and replenish its risk-adjusted capitalization. These actions include, but are not limited to, rate strengthening, underwriting tightening, expense reduction and loss control activity. Management also has non-renewed a sizable portion of the poorest performing accounts.” Best said it would “continue to monitor Florists’ overall performance, in particular its development in prior year reserves as well as loss trends in its workers’ compensation accounts.” In conclusion Best said: “The ratings and/or outlook for Florists’ are unlikely to improve over the near term but are more likely to be downgraded and/or revised, respectively, due to sustained sub-par underwriting and operating results, material adverse reserve development and/or further declines in its risk-adjusted capitalization.”
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