Ratings Recap: NEMI, United, swisspartners

February 9, 2009

Standard & Poor’s Ratings Services has issued a comment on its CreditWatch placement of Norway-based non-life insurer ASA (NEMI). The ‘BB’ insurer financial strength and long-term counterparty credit ratings on NEMI remain on CreditWatch with developing implications, where they were placed on Jan. 22, 2009, following a related action on NEMI’s parent, Iceland-based insurer Tryggingamidstödin hf. (TM; BB/Watch Neg/–). “The maintenance of the CreditWatch placement with developing implications follows an announcement on Feb. 4, 2009, by Oslo-based insurer, Protector Forsikring ASA (not rated), that it has terminated its agreement to acquire 100 percent of NEMI from TM,” noted credit analyst Peter McClean. S&P said this “latest announcement follows the previous termination of an agreement for NEMI to be acquired by Connecticut-based insurer W.R. Berkley Corp. (BBB+/Stable/–). The CreditWatch status with developing implications reflects the continuing uncertainty regarding the future ownership and financial position of NEMI. McClean added: “Although NEMI’s competitive position will have been weakened by the two failed deals, we still expect that the company will ultimately be sold. We remain unable to predict with any certainty when we expect to resolve the CreditWatch status or the extent of any possible rating action. We shall continue to monitor developments closely and take actions as appropriate.”

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of Barbados-based United Insurance Company Limited with stable outlooks. “The ratings reflect United’s favorable capitalization, strong underwriting performance and solid regional market profile,” said best. “United’s ultimate parent, Neal & Massy Holdings Limited (Trinidad), is one of the leading local business conglomerates and is publicly traded on the Trinidad and Tobago and Barbados stock exchanges. United is a leading insurer in several of its markets and enjoys excellent brand recognition throughout its regional operating territories. United has reported consistent underwriting and operating profits over the past several years as a result of prudent underwriting and conservative risk management strategies. This has enabled United to significantly enhance its capitalization, which remains more than adequate for its current rating level. Partially offsetting these rating strengths is the increasingly competitive regional markets in which the company operates and United’s reliance on reinsurance as a catastrophe risk mitigation strategy.”

A.M. Best Co. has assigned a financial strength rating of ‘A-‘ (Excellent) and issuer credit ratings of “a-” to swisspartners Versicherung AG, which is based in Liechtenstein and swisspartners Insurance Company SPC Limited, which is based in the Cayman Islands. The outlook assigned to all of the ratings is stable. “swisspartners Versicherung AG and swisspartners Insurance Company SPC Limited are owned by swisspartners Investment Network AG, whose majority shareholder is Liechtensteinische Landesbank AG (LLB),” Best explained. “The ratings of swisspartners Versicherung AG and swisspartners
Insurance Company SPC Limited recognize the flexible nature of the cost structure, the expectation that both companies’ business model should generate operating profits prospectively and A.M. Best’s belief that their business plan to grow policy placements matches the likely increase in market demand for wealth management services.” In addition Best indicated that it believes that swisspartners Versicherung AG and swisspartners Insurance Company SPC Limited have distinctive business profiles as life insurance companies specializing in the sale, underwriting and distribution of high face amount life insurance policies and annuities, which provide tax-optimized solutions to their policyholders.”

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