17 Insurers See Ratings Updates
Insurance Networking Ratings Corner, November 20, 2012
Moreover, ABL also provides a guarantee of all of ASIC and AAIC’s third-party reinsurance recoverables. In addition, ASIC’s balance sheet is protected further by an adverse development cover for its outstanding loss reserves as of Dec. 31, 2008. The ratings also acknowledge the implied support of future parental commitment.
Atlas Financial Holdings Inc. and its subsidiaries
A.M. Best has placed under review with negative implications the financial strength rating of B (Fair) and issuer credit ratings (ICR) of “bb” of American Service Insurance Co. Inc. and American Country Insurance Co., subsidiaries of Atlas Financial Holdings Inc. (Atlas). These companies operate under an intercompany reinsurance pooling agreement and are collectively referred to as American Service Pool. A.M. Best also has placed under review with negative implications the ICR of “b-” and the debt rating of “ccc” on $18 million, 4.5 percent preferred shares of Atlas.
The rating actions follow disclosure of a definitive agreement, under which Atlas will acquire all of the issued and outstanding shares of Camelot Services Inc. and its wholly owned subsidiary, Gateway Insurance Co. (Gateway). The negative implications reflect the inherent risk associated with integrating Gateway’s ongoing business into American Service Pool’s existing infrastructure, while overseeing the run off of Gateway’s non-core lines, and the increase in financial leverage at Atlas as a result of funding the transaction, in part, with the issuance of preferred stock.
These risks are mitigated, somewhat, by Atlas' recent experience running off similar books of business as well as Gateway’s current owner fully reinsuring all of Gateway’s workers’ compensation-related risk, and providing additional adverse development protection as set out in the definitive purchase agreement.
S&P lowered its counterparty credit and financial strength ratings on Aviva Plc.'s U.S. insurance subsidiaries (Aviva Life and Annuity Co., and Aviva Life and Annuity Co. of New York; collectively referred to as Aviva USA) to 'A-' from 'A'.
At the same time, S&P placed the ratings on Aviva USA on CreditWatch Developing to reflect the uncertainty regarding the future ownership of Aviva USA, and the ratings agency’s understanding of Aviva Plc.'s statement that a change in ownership could occur in the short term.
Based on Aviva Plc.'s Nov. 8 announcement that the U.S. operations were being tendered for sale, S&P has removed the one notch of implied parental support to its published ratings on Aviva USA and lowered its ratings on Aviva USA by one notch. S&P said its published ratings now reflect only the stand-alone credit profile of the U.S. operations.
AXA General Insurance
A.M. Best has withdrawn the financial strength rating of A (Excellent) and issuer credit rating of “a+” of AXA General Insurance (AXA General). These rating actions follow the amalgamation of AXA General into its affiliated company, Novex Insurance Co., on April 23, 2012, by the parent, Intact Financial Corp.
A.M. Best has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit rating (ICR) of “a-” of Crusader Insurance Co. (Crusader). Additionally, A.M. Best has affirmed the ICR of “bbb-” of Crusader’s parent company, Unico American Corp. (Unico). The outlook for all ratings is stable.
The rating actions reflect Crusader’s excellent level of risk-adjusted capitalization and profitable financial performance, coupled with its solid knowledge of the California market. Furthermore, the ratings acknowledge the financial flexibility afforded Crusader via Unico.
Offsetting these strengths is Crusader’s geographic concentration of risk. As a single-state writer in California, Crusader remains subject to competitive market pressures and the state’s legislative and regulatory environment. In addition, Crusader’s concentration of property risks exposes the company’s surplus to natural and man-made catastrophes, namely fire following earthquake, although Crusader’s reinsurance program reduces net exposure to a reasonable level.
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