Ratings Roundup: South China Insurance, Transmonde, Bluewater

February 4, 2008

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and the issuer credit rating of “a-” of Taiwan’s South China Insurance Co., Ltd. with a stable outlook. “The ratings reflect South China’s profitable operating results, conservative investment philosophy and diversified distribution capabilities with operational synergies derived from its linkage with Hua Nan Financial Holdings Co. Ltd. (HNFH),” Best explained. “HNFH is one of the financial conglomerates in Taiwan and is publicly listed on the Taiwan stock exchange. The ratings also consider the company’ s risk-adjusted capitalization that is commensurate with the current ratings.”

A.M. Best
Co. has assigned an issuer credit rating (ICR) of “a-” and affirmed the financial strength rating (FSR) of ‘A’ (Excellent) of Bermuda-based Transmonde Services Insurance Company Limited with stable outlooks. “The ratings of Transmonde reflect its minimal underwriting leverage, strong level of capitalization and its profitable operating results driven by excellent underwriting performance,” said Best. “Partially offsetting these positive rating factors are Transmonde’ s relatively high retentions and concentration in liability lines with significant loss severity potential and its limited market profile as a single parent captive. Transmonde provides professional, general and pollution liability coverages to subsidiaries and affiliates of its publicly traded Swiss parent, SGS Group.”

Standard & Poor’s Ratings Services has lowered its insurer financial strength rating and long-term counterparty credit rating on Norway’s non-life insurer Bluewater Insurance ASA to ‘BBB-‘ from ‘BBB’. S&P also removed the ratings from CreditWatch, where they had been placed on Jan. 7, 2008, following a profit warning from the company. The outlook on the ratings, however, is negative. “The rating action reflects Bluewater’s failure to meet our expectations, in particular its sharp deterioration in operating performance in 2007,” stated S&P credit analyst Peter McClean. “This significantly weakened its capitalization. The rating action also reflects our concerns regarding management strategy and the challenges facing Bluewater in establishing and maintaining a sustainable competitive position in both the marine and non-marine sectors.” S&P added that “Bluewater’s operating performance deteriorated sharply during 2007 from its historically good level, resulting in a combined ratio of 140 percent, significantly worse than the 104 percent seen in 2006.”

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