Ratings Recap: Everest Re, Groupama, First Net, Novae, Hiscox, Amlin, Eurasia, Amlin (Bermuda), HSBC Re

October 29, 2007

Standard & Poor’s Ratings Services commented on an announcement by the Bermuda-based Everest Re Group Ltd. (A-/Negative/–) and related subsidiaries (collectively referred to as Everest). Following its third-quarter earnings release, Everest said it would “be reviewing the asbestos claims notifications that it has received in recent quarters as part of its year-end reserve review,” said S&P. The rating agency then indicated that, “if Everest’s reserve review leads it to strengthen its asbestos reserves,” S&P does not expect any such “strengthening to affect the ratings as long as the group’s capital adequacy ratio–as measured by Standard & Poor’s model–remains extremely strong. Currently, the group’s capital adequacy is about 200 percent.”

A.M. Best Co. has assigned a debt rating of “bbb” to the €1 billion ($1.442 billion) deeply subordinated securities (Titres Super Subordonnes) issued by Groupama S.A. (France).

A.M. Best Co. has affirmed the financial strength rating of ‘B+’ (Good) and assigned an issuer credit rating (ICR) of “bbb-” to First Net Insurance Company of Guam with a stable outlook. “The ratings reflect First Net’s continued profitable operating performance, conservative underwriting leverage and local market knowledge,” said Best, as well as its “conservative investment portfolio and moderate net premium leverage ratio

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit rating (ICR) of “a-” of the UK’s Novae Insurance Company Limited (NICL) and maintains its stable outlook. “NICL is likely to maintain excellent risk-adjusted capitalization in 2007 and 2008,” said Best, adding that in its “risk-adjusted analysis, the company benefits from a low level of credit risk exposure due to an absence of major claims activity and from its conservative investment portfolio.”

A.M. Best Co. has affirmed the Best’s Syndicate Rating of ‘A’ (Excellent) and the issuer credit rating (ICR) of “a+” of Lloyd’s Syndicate 33, which is managed by Hiscox Syndicates Limited. Best also revised the outlook on both ratings to stable
from positive. The move reflects the “stable outlook on the rating of Lloyd’s of London,” Best explained. Best also affirmed the ICRs of “bbb+” of Hiscox plc, the group’s UK holding company, and Hiscox Limited (Bermuda), the group’s ultimate parent holding company. The outlook for these ratings remains stable.

A.M. Best Co. has upgraded the Best’s Syndicate Rating to ‘A+’ (Superior) from ‘A’ (Excellent) and the issuer credit rating (ICR) to “aa-” from “a+” of Lloyd’s Syndicate 2001, which is managed by Amlin Underwriting Limited (AUL). Best also upgraded the ICR to “a-” from “bbb+” of Amlin Plc, the non-operating, UK-based holding company of the Amlin group of companies, and the debt ratings to “bbb+” from “bbb” on the fixed-to-floating rate subordinated notes issued by Amlin as follows: $50 million due in 2019, $50 million due in 2020 and £230 million [$474 million] due in 2026. The outlook for all the ratings is stable.

A.M. Best Co. has affirmed the financial strength rating of ‘B++’ (Good) and the issuer credit rating of “bbb” of Eurasia Insurance Company JSC, which is based in Kazakhstan. The outlook for both ratings remains stable. “The ratings reflect Eurasia’s leading position in Kazakhstan’s expanding insurance and reinsurance markets, an improving business profile, strong risk-adjusted capitalization and excellent financial performance,” said Best.

A.M. Best Co. has upgraded the financial strength rating to ‘A’ (Excellent) from ‘A-‘ (Excellent) and the issuer credit rating (ICR) to “a” from “a-” of Amlin Bermuda Limited (ABL) with a stable outlook. “The rating upgrades reflect ABL’s conservative implementation of its business plan and A.M. Best’s expectation that ABL will maintain strong risk-adjusted capitalization,” said the bulletin. Best added that the upgrades also reflect the “excellent performance of Lloyd’s Syndicate 2001 (which is managed by Amlin
Underwriting Limited), as over 90 percent of ABL’s business comprises either reinsurance of syndicate 2001’s account or additional lines on existing business already written by the syndicate.”

Standard & Poor’s Ratings Services has assigned its ‘AA’ counterparty credit and insurer financial strength ratings to Dublin-based HSBC Reinsurance Ltd. (HSBC Re) with a positive outlook. “We believe that HSBC Re benefits from the full, albeit implicit, support of its parent group, which will always act in a timely manner to ensure that HSBC Re is fully able to meet its obligations,” explained S&P credit analyst David Anthony. “The reinsurer is also satisfactorily capitalized on a stand-alone basis, and enjoys strong and traditionally stable earnings, and very strong liquidity and investments,” he added. S&P added that HSBC Re also “benefits from attractive growth prospects as a following reinsurer of the primary life and non-life insurance operations of the global HSBC Insurance group, its joint-ventures, and its strategic partners.”

Source: S&P, AM. Best

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