Best Affirms Platinum and Reinsurance Subsidiaries Ratings

March 25, 2009

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of the Bermuda-based Platinum Underwriters Group and its members. Best also affirmed the ICR of “bbb” of Platinum Underwriters Holdings, Ltd. and the debt ratings of Platinum and Platinum Underwriters Finance, Inc. The outlook for all of the ratings is stable.

“The ratings reflect the group’s excellent capitalization, strong operating results and established business position as a global, multi-line provider of reinsurance coverages,” said Best. “The ratings also reflect the group’s good financial flexibility, solid liquidity and sound enterprise risk management capabilities.”

However, Best noted that “somewhat offsetting these strengths are the challenges that have occurred in the global reinsurance market including rate softening and increased competition in recent years and the impact of the capital market crisis on total return measures. However, premium rate trends have improved as of January 1, 2009, reflecting the reduced capacity of the reinsurance markets due to losses reported in 2008.

“The group has generated very strong underwriting results over the most recent five-year period with a five-year average combined ratio of 93.5 percent. From an earnings perspective, net investment income continued to contribute to the bottom line due to the group’s growing invested asset base and sound operating cash flow measures.

“Despite challenges related to natural catastrophes and investment market turmoil, Platinum generated a healthy 2008 earnings result with net income of $226 million, largely driven by favorable loss reserve development. The group monitors its exposures to catastrophe losses through several modeling techniques and limits the amount of capital exposed based on the modeling of a 1 in 250 year per occurrence event.

“Platinum maintains conservative financial leverage measures as total debt-to-total capital was approximately 12.8 percent at year-end 2008 with strong interest coverage measures. Additionally, Platinum’s asset allocation is conservative, with the vast majority held in highly rated fixed-income holdings with diversification by industry sector and issuer.”

Source: A.M. Best –

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