Standard & Poor’s Ratings Services announced that it withdrew its ‘A’ counterparty credit and financial strength ratings on XL Europe Ltd. on Dec. 10, 2009. “We withdrew the ratings because of the company’s merger and business portfolio transfer, effective Dec. 31, 2008, into XL Insurance Co. Ltd., another core member of the XL Capital group,” S&P explained. XL Insurance Co. Ltd. has an ‘A’ counterparty credit and financial strength ratings and a negative outlook.
Standard & Poor’s Ratings Services has affirmed its ‘A+’ long-term counterparty credit and insurer financial strength ratings on Dublin-based Wagram Insurance Co. Ltd. With a stable outlook. Wagram is the wholly owned captive subsidiary of electric utility company Electricite de France S.A. (EDF; A+/Stable/A-1), and qualifies as a captive insurer under S&P’s rating criteria. “As such, we rate Wagram at a level commensurate with the ratings on its parent,” said the bulletin. “Wagram is regarded as an integral part of EDF’s risk management strategy,” S&P continued. “It is the sole captive insurer of the EDF group, and solely writes business emanating from the group. Wagram was established in 2004 in order to offer insurance cover worldwide to EDF companies. In turn, Wagram remains wholly reliant on EDF for the preservation of its competitive position and financial flexibility. Hence, Wagram’s fortunes are inextricably linked to those of EDF.” S&P said the stable outlook on Wagram “reflects the stable outlook on its parent.” It will continue to so qualify “for as long as Wagram continues to qualify as a captive insurer” according to S&P’s rating criteria.
A.M. Best Co. has assigned financial strength ratings of ‘B++’ (Good) and issuer credit ratings of “bbb” to National General Insurance Corporation (NAGICO) N.V. , which is based in St. Maarten, and Nagico Insurance Company Limited (NICL), which is based in Anguilla. The outlook assigned to all ratings is stable. Best said “these rating actions reflect NAGICO and NICL’s common ownership, adequate consolidated risk-adjusted capitalization, dominant market presence in its domestic market and overall profitability in recent years. NAGICO is the leading property/casualty insurer in St. Maarten with a dominant market share in the Netherlands Antilles, while NICL is one of the leading insurers in several overseas markets. On a consolidated basis, the companies have reported overall operating profits in recent years, which has enabled them to enhance capitalization through the retention of earnings, given their common parent company’s minimal dividend requirements. Consequently, both companies continue to maintain more than adequate risk-adjusted capitalization for their current business profiles.” However “the increasingly competitive regional markets in which NAGICO and NICL operate, and the limited financial flexibility of both companies as a result of their private ownership structure” should be considered as offsetting factors, said Best. “Both NAGICO and NICL, like other regional insurers, have significant exposure to catastrophic losses. NAGICO and NICL manage this risk through the utilization of reinsurance to limit their catastrophe exposure to a manageable level and protect their surplus against frequency of events.”
Standard & Poor’s Ratings Services has affirmed its ‘A-‘ long-term counterparty credit and financial strength ratings on Guernsey-based A.G.S. Insurance Co. Ltd. with a stable outlook. AGS, the wholly owned captive subsidiary of U.K.-based drinks manufacturer Diageo PLC (Diageo; A-/Stable/A-2), as such it qualifies as a captive insurer under S&P’s rating criteria and is rated at a level commensurate with the ratings on its parent. S&P said “AGS is regarded as an integral part of Diageo’s risk management strategy. It is the Diageo group’s only captive insurer, and solely writes business emanating from the group. Diageo has maintained a captive strategy since 1983 to minimize the group’s risk-transfer costs, and to increase emphasis on risk management and loss prevention within the group. In turn, AGS remains wholly reliant on Diageo for the preservation of its competitive position and financial flexibility. Hence, AGS’ fortunes are inextricably linked to those of Diageo. Credit analyst Natasha Tansey explained that the “stable outlook on AGS reflects the stable outlook on Diageo. The ratings and outlook on the parent will determine those on AGS for as long as AGS continues to qualify as a captive insurer under Standard & Poor’s rating criteria.” In addition, S&P “anticipates that in the event of a significant loss, additional capital would be promptly received from Diageo through fully paying up partly paid shares,” Tansey continued.
A.M. Best Co. has upgraded the issuer credit rating to “bbb+” from “bbb” and affirmed the financial strength rating of ‘B++’ (Good) of Bahrain-based Arab Insurance Group (B.S.C.) (ARIG), both with stable outlooks. “The rating upgrade reflects ARIG’s improving technical performance, in comparison with the marginal historical technical results of recent years,” Best explained. “Additional factors are the company’s strong business profile and risk-adjusted capitalization as well as its sophisticated risk management.” Best added that in its view, “ARIG is progressively strengthening its reinsurance portfolio, discontinuing the unprofitable non-life business and improving its awareness and control over its long-term life business, which, going forward, is planned to be managed through a separate fund evaluated on an embedded value basis.” Best said it believes that the non-life combined ratio is likely to remain below 100 percent in 2009.” Best also acknowledged that ARIG’s “pruning of bad business is a gradual process, also in consideration that bouquet placements are the preferred arrangement for proportional treaties in ARIG’s main market.” In Best’s opinion, ARIG is “steadily enhancing its level of diversification by lines of business and geographic markets and increasing its presence in Africa and the Far East, while still preserving its recognized position in the Middle East, which remains the company’s core market.” Best considers “ARIG’s risk-adjusted capitalization as strong, supportive of its ratings and proven to be resilient to the recent financial markets crisis. The company continues to develop its enterprise risk management framework, comprising the dynamic financial analysis model devised in 2007. In terms of investment and underwriting exposure, ARIG is not exposed to Dubai World group entities’ debt, although it does have some property and engineering accounts related to Dubai World group.”
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