Best Affirms Am Trust Group Ratings; Revises Outlook to Positive

June 13, 2008

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and issuer credit ratings (ICR) of “a-” of the New York-based AmTrust Group. The ratings also “apply to AmTrust International Insurance, Ltd. (AII) (Bermuda), Technology Insurance Company, Inc. (Technology) (Nashua, NH), Rochdale Insurance Company (Rochdale) (New York, NY), Wesco Insurance Company (Wesco) (Dover, DE) and AmTrust International Underwriters, Limited (Dublin, Ireland) (AIUL), which operate through an intercompany quota share reinsurance arrangement with AII,” said Best.

In addition, Best affirmed the ICR of “bbb-” of the parent holding company, AmTrust Financial Services, Inc. (AFSI). The outlook for all of these ratings has been revised to positive from stable.

However, Best has downgraded the FSR to ‘A-‘ (Excellent) from ‘A’ (Excellent) and ICRs to “a-” from “a” for the four entities acquired from Chicago-based Unitrin, Inc. on June 2, 2008: Milwaukee Casualty Insurance Company (MCIC), Security National Insurance Company of Dallas, Texas, Trinity Universal Insurance Company of Kansas, Inc. (TUIC) and Trinity Lloyds Insurance Company. Best also placed these ratings under review with developing implications pending approval of an intercompany reinsurance agreement with AmTrust. Upon completion, the positive outlook on AmTrust will be extended to these four entities.

“The ratings of AmTrust reflect the consolidated group’s solid balance sheet strength, sustained strong operating performance within its niche markets and the benefits derived from AFSI, including AFSI’s commitment to maintain sufficient capital as well as extend additional capital should it be needed to support the group’s expanding operations,” Best explained.

However, the rating agency said “the group’s aggressive growth in both premium volumes and associated liabilities in recent years, the inherent risk in integrating new business acquired through renewal rights on existing books of business and the potential strain that this growth places on the group’s risk-adjusted capitalization,” should be considered as “offsetting” factors. Best added that, “despite these concerns, the outlook is supported by AmTrust’s strong operating results, access to capital and commitment to prudent underwriting.”

MCIC, SNIC, Trinity Lloyds and TUIC provide the group additional diversification with a platform that currently writes small commercial packages, workers’ compensation and commercial automobile policies.

Source: A.M. Best –

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