Ratings Recap: MMA, Shinkong, First Ins., Singapore Re, Swiss Re, W.R. Berkley (Europe)

November 21, 2007

Standard & Poor’s Ratings Services has raised its long-term counterparty credit and insurer financial strength ratings on France-based insurer MMA IARD Assurances Mutuelle (MMA IARD) to ‘A’ from ‘A-‘. S&P also raised its insurer financial strength rating on MMA’s guaranteed subsidiary, MMA Insurance PLC to ‘A’ from ‘A-‘. The outlook for bot ratings is stable. “The upgrade reflects the smooth integration of the portfolio of Azur, as evidenced by the merger of MMA and Azur’s tied-agent networks in January 2007,” S&P explained. “We believe the integration’s execution risk has significantly declined and that the operation will not alter MMA’s risk profile,” added S&P credit analyst Virginie Crepy.

Standard & Poor’s Ratings Services has affirmed its ‘BBB+’ insurer financial strength and counterparty credit ratings on Shinkong Insurance Co. Ltd. with a positive outlook. “The ratings on Shinkong Insurance reflect the company’s good market position, satisfactory operating performance, liquid investment portfolio, and adequate capitalization,” stated S&P credit analyst Connie Wong. “Counterbalancing factors include concentration risk in the insurer’s group-related investments.”

Standard & Poor’s Ratings Services has revised its outlook on its ‘BBB’ insurer financial strength and counterparty credit ratings on First Insurance Co. Ltd. to positive from stable, and affirmed the ratings. “The outlook revision reflects Standard & Poor’s expectation that First Insurance’s satisfactory operating performance is sustainable,” explained S&P credit analyst Connie Wong. The insurer has improved its risk management controls, particularly on its historically volatile investment book.

A.M. Best Co. has affirmed the financial strength rating of ‘A’- (Excellent) and the issuer credit rating of “a-” of Singapore Reinsurance Corporation Limited. (Singapore Re) with a stable outlook. “The ratings reflect Singapore Re’s superior risk-adjusted capitalization level, stable investment income and favorable underwriting result of bilateral cessions,” said Best. “Singapore Re’s risk-adjusted capitalization level is superior, as measured by Best’s Capital Adequacy Ratio (BCAR), and is more than sufficient to support its current ratings as well as its estimated premium level for 2007,” the bulletin added.

Fitch Ratings has affirmed Swiss Reinsurance Company’s (Swiss Re) Long-term Issuer Default rating (IDR) and insurer financial strength (IFS) rating at ‘AA-‘ and their stable outlook. Fitch also affirmed Swiss Re’s convertible securities rating, Swiss Re Solutions Holding Corp’s issue ratings and Employers Reinsurance Corporation’s IFS rating; and affirmed Reassure America Life Insurance Co.’s IFS rating. Fitch’s decision follows Swiss Re’s widely disseminated announcement that it has written down CHF 1.2 billion pre-tax ($1 billion) after the sharp decline in value of two credit default swaps written by its Credit Solutions unit (See IJ web site Nov. 17). “In spite of the write-down and the sudden announcement of the exposure, Fitch has affirmed Swiss Re’s ratings, as the agency considers the size of the write-down to be immaterial to the group,” said the bulletin. “The write-down is equivalent to only 0.7 percent of the group’s total investments as of 30 September 2007 and 25 percent of the profit before tax realized by Swiss Re in the first nine months of 2007 (CHF 4.923 billion [$4.1 billion]).”

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and the issuer credit rating (ICR) of “a” of UK-based W. R. Berkley Insurance (Europe) Limited (WRB Europe) with stable outlooks. Best said that in its opinion “WRB Europe is likely to maintain excellent risk-adjusted capitalization in 2007, benefiting from full retention of earnings. The rating also factors support from WRB Europe’s ultimate parent, W. R. Berkley Corporation (WRB) of Greenwich, Conn.” Best also noted that “WRB Europe provides its parent company with a vehicle for international diversification outside the United States. WRB demonstrated its support for the company with its agreement to purchase the 20 percent minority interest in WRB Europe currently held by Kiln Ltd. This transaction is expected to close either later in 2007 or early in 2008.”

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