Recent Ratings Recap: Lancashire, Atlantic & Western

A.M. Best Co. has affirmed the financial strength rating (FSR) of “A-” (Excellent) and the issuer credit rating (ICR) of “a-” of Bermuda-based Lancashire Insurance Company. Best also affirmed the FSR of “A-” (Excellent) and assigned an ICR of “a-” to Lancashire Insurance Company (UK) Limited. Concurrently, Best affirmed the ICR of “bbb-” and assigned a debt rating of “bb+” on $125 million subordinated notes, due December 2035 to Lancashire Holdings Limited. The outlook for all ratings is stable. Best noted that the “affirmations reflect Lancashire’s successful first-year execution of operations, solid risk-based capitalization, increasing presence in targeted markets and development of risk management systems.”

Fitch Ratings has removed the ratings for Atlantic & Western Re Ltd.’s Class A notes ‘BB’ and –Class B notes ‘B’ from its Rating Watch Negative list, as they have now been paid in full. Fitch explained that Atlantic & Western Re provided coverage to PXRE Reinsurance Ltd., a Bermuda-based reinsurer, on a five-year reinsurance contract. PXRE did not pay the premium due Feb. 8, 2007 under the reinsurance contract, which resulted in a default under the reinsurance contract. As a result the reinsurance contract was terminated, early Fitch put the notes on its rating watch.