A.M. Best Co. has affirmed the financial strength rating of ‘B++’ (Good) and issuer credit rating (ICR) of “bbb+” of Novae Insurance Company Limited (NICL), the ICR of “bbb” of Novae Group plc (Novae) (the ultimate holding company of the Novae group of companies) and the ICR of “bbb-” of Novae Holdings Limited (Novae Holdings) (the non-operating intermediate holding company of Novae’s Lloyd’s operations).
Best also affirmed the debt ratings of “bbb-” on the £70 million ($108 million) subordinated notes due 2017, issued by Novae, and the debt ratings of “bbb-” on the $15 million senior unsecured floating rate notes due 2034, “bb+” on the $11 million subordinated floating rate notes due 2034 and “bbb-“on the $ 10million senior unsecured floating rate notes due 2034, all issued by Novae Holdings.
Best said the “outlook for all these ratings is negative.”
Concurrently Best affirmed the Best’s Syndicate Rating of ‘A’ (Excellent) and ICR of “a+” of Lloyd’s Syndicate 2007, which is managed by Novae Syndicates Limited (NSL). The outlook on these ratings remains stable.
Best then announced that it has “withdrawn all the ratings at the company’s request and assigned an NR-4 to the financial strength ratings and an “nr” to the ICRs and debt ratings. These rating actions remove the under review status of NICL, Novae Holdings and Novae, applied in December 2009.”
Best explained that the “negative outlook on the ratings of NICL reflects uncertainty relating to management’s plans for existing liabilities and the adequacy of its predominantly long-tail reserves. NICL commenced underwriting in 2006. Its reserves largely relate to the 2008 and 2009 underwriting years, which remain immature from a reserving perspective.
“The negative outlook on the ratings of Novae and Novae Holdings reflects ongoing uncertainty relating to the capital restructuring of the group and the impact of strong growth on consolidated risk-adjusted capitalisation and prospective performance. In 2010, Novae is expected to expand significantly in business lines that deviate from its specialist liability profile (contributing approximately 25 percent of consolidated gross written premiums).”
Source: A.M. best – www.ambest.com
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