Ratings Roundup: Exporters, Endurance

August 14, 2008

Fitch Ratings has affirmed the insurer financial strength (IFS) rating of Exporters Insurance Company Ltd., a Bermuda-domiciled group captive insurance subsidiary of EIC Corporation Ltd. that focuses on writing credit and political risk insurance at ‘A-‘. Fitch also affirmed the IFS rating of Exporters Insurance Company (Europe) Ltd. (Exporters Europe) at ‘A-‘. The outlook on both ratings has been revised to stable from positive. Fitch said the “rating outlook revision reflects Exporters relatively small absolute level of capital and recent credit market conditions that have unfavorably affected both Exporters’ investment results and premium volume. As of June 30, 2008, Exporters has experienced nearly $1 million of mark-to-market after-tax write-downs in its roughly $62 million investment portfolio, with a small portion related to its commercial mortgage-backed securities portfolio. Exporters’ investment portfolio consists primarily of highly rated taxable bonds, including corporate bonds and mortgage-backed securities, and tax-exempt securities. While Fitch does not consider this impairment to be material at this time, Fitch believes that, at the same time, relative to Exporters’ small capital size, additional material write-downs on top of the current impairments could cause concern.”

Fitch Ratings has initiated rating coverage on Endurance Specialty Insurance Ltd. (Endurance Bermuda) by assigning an ‘A’ insurer financial strength (IFS) rating. Endurance Bermuda is the principal (re)insurance operating subsidiary of Endurance Specialty Holdings Limited (Endurance). Fitch has also assigned the following first-time ratings for Endurance:–Issuer Default Rating (IDR) ‘A-‘; –Senior unsecured notes ‘BBB+’; –Non-cumulative perpetual preferred shares ‘BBB’. The outlook on all of the ratings is stable. “The ratings reflect Endurance’s solid profitability, earnings and cash flow benefits derived from the company’s diverse book of business and the strong support the company’s high-quality and liquid investment portfolio provides for its loss reserves,” said Fitch. “The ratings also contemplate adequate capitalization and a strong balance sheet.”

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