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Insurance Networking Ratings Corner, December 11, 2012
A.M. Best, Fitch Ratings, Standard & Poor’s (S&P’s) and Moody’s Investors Service released ratings updates. The following are some of the most recent:
A.M. Best has affirmed the financial strength rating of A (Excellent) and issuer credit rating of “a” of BMO Life Assurance Co. (BMOLAC). The outlook for both ratings is stable.
BMOLAC is an indirect wholly owned subsidiary of Bank of Montreal (BMO) through BMO Life Insurance Co., an intermediate holding company. In 2009, BMO closed the acquisition of AIG Life Insurance Co. of Canada (AIG Canada) and, subsequently, converted AIG’s business platform and distribution to BMOLAC. BMOLAC underwrites a full suite of individual life insurance products including term life, whole life, universal life, critical illness and annuities. The company distributes its products across Canada through independent agents, as well as direct to consumer and workplace markets.
The ratings of BMOLAC consider the company’s stable underwriting performance and favorable risk-adjusted capitalization. A.M. Best believes BMOLAC is an important subsidiary of BMO as it represents a sizeable portion of BMO’s insurance business. BMOLAC also benefits from BMO’s capital support, which is expected to be provided on an as needed basis. Further supporting the ratings are the stability of the Canadian banking sector and BMOLAC during the financial crisis.
A.M. Best Europe has withdrawn the financial strength rating (FSR) of A (Excellent) and issuer credit rating (ICR) of “a” of Chartis Europe S.A. (CESA), following its merger into its affiliate, AIG Europe Ltd., formerly Chartis Europe Ltd. (CEL). The merger took effect from Dec. 1, 2012, at which time all assets and liabilities of CESA were merged into AIG Europe Ltd. This merger completes the Chartis group’s restructuring of its European operations and more closely aligns its legal entity and management structures in Europe.
On Dec. 3, 2012, CEL changed its name to AIG Europe Ltd. The company’s FSR of A (Excellent) and ICR of “a” remain unchanged with a stable outlook.
Fitch has affirmed the 'A-' Insurer Financial Strength (IFS) rating of the First American Title Insurance Co.s (First American). Additionally, Fitch has affirmed the 'BBB' Issuer Default Rating (IDR) for First American Financial Corp. (FAF). The Rating Outlook for all ratings remains Positive.
Fitch's rating affirmation is a reflection of First American's capitalization, profitability, and moderate financial leverage. Fitch looks at FAF's capitalization on both a risk adjusted and non-risk adjusted basis. By both measures First American's capital is amongst the highest in Fitch's title insurance rated universe.
FAF also had several favorable developments since the last review including the complete sale of CoreLogic Inc. (CGLX) stock in Q3 2012 for $207.9 million resulting in a realized gain of $40.4 million. Additionally, open residential orders are up 27 percent in Q3 2012 compared to Q3 2011 and commercial revenue is up 19 percent to $106.3 for the same time period.
Flagstone Reinsurance Holdings S.A. and its subsidiaries
Fitch removed the ratings of Flagstone Reinsurance Holdings S.A. and subsidiaries (collectively Flagstone) from Rating Watch Evolving and affirmed them at their current levels. The Rating Outlook is Positive.
The ratings actions follow the completion of Flagstone's acquisition by Validus Holdings Ltd. (Validus). The transaction originally was announced on Aug. 30, 2012, and closed on Nov. 30, 2012.
The rating affirmation and Positive Rating Outlook reflects Fitch's previously announced indication that if the transaction were to close as planned, the agency would bring Flagstone's ratings in line with Validus' ratings.
Fitch has removed the following ratings from Rating Watch Evolving and affirmed them with a Positive Rating Outlook:
Flagstone Reassurance Suisse S.A.
• Insurer Financial Strength at 'A-'
Flagstone Reinsurance Holdings, S.A.
• Long-term Issuer Default Rating (IDR) at 'BBB+'
• $120 million of floating rate subordinated debentures, due Sept. 15, 2036, at 'BB+'
• Euro13 million of floating rate subordinated debentures, due Sept. 15, 2036, at 'BB+'
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