Ratings Recap: BluePoint Re, Channel Re, RAM Re, Assured Guaranty, Steamship Mutual, Hannover Ltd., ARAG

February 19, 2008

Standard & Poor’s Ratings Services has placed its ‘AA’ rating on BluePoint Re Ltd., its ‘AAA’ rating on Channel Reinsurance Ltd., and its ‘AAA’ rating on RAM Reinsurance Co. Ltd. on CreditWatch with negative implications. Ratings on the companies’ related entities, as well as RAM Re’s contingent capital facility, were also affected. S&P also affirmed its ‘AA’ rating on Assured Guaranty Re Ltd., with a stable outlook. “The rating actions are the result of our most recent review of all the bond reinsurance companies’ capital positions, our projections of their respective subprime-related losses, and the companies’ plans for managing their capital positions,” said S&P. “Our review covered the scope of each plan relative to the projected losses for that company, our view of the success each company has had to date in implementing its plan, and our assessment of the likelihood that each company could implement the remaining components of its plan. This review is part of Standard & Poor’s ongoing assessment of these bond reinsurers’ potential subprime-related losses and management of their capital positions to handle the losses. Further reviews will occur as circumstances warrant.”

Standard & Poor’s Ratings Services has assigned its ‘BBB+’ long-term counterparty credit and insurer financial strength ratings to Bermuda-based marine insurer The Steamship Mutual Underwriting Association (Bermuda) Ltd. with a stable outlook. S&P said the “ratings reflect the company’s core status within the economic grouping collectively known as The Steamship Mutual (“Steamship” or “the club”), of which the principal operating entities include its sister direct underwriting company, the U.K.-based Steamship Mutual Underwriting Association Ltd. and Bermuda-based reinsurer Steamship Mutual Underwriting Association (Reinsurance) Ltd. The ratings also reflect the club’s strong and improving competitive position, strong financial flexibility, and the high barriers to entry of protection and indemnity (P&I) insurance. Partially offsetting these strengths are an aggressive investment strategy and the moderately high industry risk of the P&I sector.”

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of the UK-based International Insurance Company of Hannover Limited, a subsidiary of Germany’s Hannover Rueckversicherung AG (Hannover Re), with a stable outlook. Best said it “expects Inter Hannover’s risk-adjusted capitalization to remain strong at year-end 2007 and 2008, supported by Hannover Re’s capital injection of £15 million ($30 million) in mid-2007. The rating factors Inter Hannover’s importance to Hannover Re as its only vehicle for writing agency business (written through binders). Additionally, Inter Hannover fronts business for its parent in Europe, as Hannover Re is not licensed to write direct business.”

Standard & Poor’s Ratings Services has affirmed its ‘BBB’ long-term counterparty credit and insurer financial strength ratings on German insurer ARAG Allgemeine Rechtsschutz-Versicherungs AG (ARAG RS) with a stable outlook. S&P then announced that has withdrawn the ratings at the company’s request, and therefore ARAG RS is no longer subject to its surveillance by Standard & Poor’s. S&P noted that “at the time of the rating withdrawal reflect ARAG group’s (ARAG) good competitive position, increasing international diversification in its core line of business legal expenses, and adequate capitalization. These strengths are partly offset by a continued declining market share in legal expenses business in Germany, a marginal competitive position in life, and a relatively short track record of good operating performance.”

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