Best Removes Ironshore from Review; Affirms Ratings

April 13, 2009

A.M. Best Co. has removed from under review with negative implications and affirmed the issuer credit rating (ICR) of “bbb-” of Cayman Islands-based Ironshore Inc. Best has also removed from under review with negative implications and affirmed the financial strength rating of ‘A-‘ (Excellent) and ICR of “a-” of Ironshore’s operating subsidiaries.

These include Ironshore Insurance Ltd., Ironshore Reinsurance Ltd (both of Bermuda), Ironshore Indemnity Inc. (Minneapolis, MN) and Ironshore Specialty Insurance Company (Phoenix, AZ). The outlook assigned to all ratings is stable.

Best noted that it had placed the ratings under review with negative implications on February 3, 2009, “which was reflective of the material deviation from its original business plan and the execution risks of its new business model. Since that time, Ironshore has successfully executed its new business initiatives despite very challenging market conditions. Some of the more notable of these include entering into strategic relationships to write catastrophe excess casualty and long-term environmental policies, securing pro-rata reinsurance in order to provide larger gross limits for clients and reducing the risk appetite for property catastrophe exposures.”

In addition Best said “Ironshore has increased its employee count with experienced personnel to support the company’s needs under its revised business plans. These seasoned veterans are familiar with Ironshore’s new management team, having previously worked with most team members.

“The rating affirmations contemplate the material shift in the business profile that resulted from the change in senior management and the benefits garnered from the company’s diversification into new lines of business.”

Best concluded that while the changes “represent a material shift from Ironshore’s original business plan,” it nonetheless “views these developments as beneficial to the long-term franchise value of the group. Furthermore, the business profile of the group, a key component of the ratings process, has been enhanced by the diversification into lines of business not correlated with the company’s property book of business.”

Best added that the outlook reflects its “expectation that Ironshore’s performance will benefit from a favorable rate environment in most targeted lines of business and capital will be managed prudently.”

. Source: A.M. Best –

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