A.M. Best Co. has assigned a financial strength rating of ‘A-‘ (Excellent) and an issuer credit rating of “a-” to Indiana-based Max America Insurance Company (MAIC) with a positive outlook on both. The formation of MAIC by its ultimate parent company, Bermuda-based Max Capital Group Ltd. (MXGL) ” further expands MXGL’s operations into the U.S. market by offering property, inland marine, casualty, excess liability and umbrella insurance products on an admitted basis in all 50 states,” Best noted. “MAIC
complements its immediate parent company, Max Specialty Insurance Company (Delaware), which offers similar products on an excess and surplus lines basis. “MAIC’s ratings reflect its fully reinsured status, solid capitalization and strong management team. In addition, MAIC meets A.M. Best’s previously established requirements for new company formations. As a member of MXGL, MAIC has been assigned a positive outlook based upon MXGL’s planned reduction of its riskier alternative investment portfolio allocation, evolving operating platform and increasing global presence.”
Standard & Poor’s Ratings Services has raised its counterparty credit and financial strength ratings on Professionals Direct Insurance Co. (PDIC) to ‘A-‘ from ‘BBB’, and has assigned a stable outlook. “We raised the rating because of the strong explicit support provided by PDIC’s parent, Hanover Insurance Co. (HIC), in the form of a 100 percent reinsurance agreement,” explained credit analyst John Iten. Under the agreement, PDIC will cede all current and future insurance premiums and liabilities to HIC. Based on this agreement, we now view PDIC as a core member of the Hanover Insurance Group (Hanover). S&P noted: “Hanover purchased PDIC in 2007, and PDIC now operates as a business unit within Hanover rather than as a stand-alone entity. The acquisition and integration of PDIC is in line with Hanover’s strategy of enhancing organic growth by acquiring small insurance companies or underwriting agencies with specialized underwriting products or expertise that can be leveraged across Hanover’s large distribution network of independent agents. PDIC specializes in professional liability coverage for attorneys. PDIC’s premium volume was $18.1 million in 2007, which was less than 1 percent of Hanover’s premium volume of about $2.4 billion in that year.” S&P also indicated that it expects Hanover’s” underwriting performance will remain strong in 2008. Net premiums written will likely increase at a low-single-digit rate. Personal lines should benefit from an increase in policy count in personal auto and increased homeowner rates, while commercial lines will benefit from the sale of newer specialty products, recently augmented by the acquisition of three small specialty writers. However, rate declines in most standard lines will largely offset this growth.”
A.M. Best Co. has placed the financial strength rating (FSR) of ‘B+’ (Good) and issuer credit rating (ICR) of “bbb-” of Utah’s Great Western Insurance Company under review with negative implications. Best said the “rating actions reflect Great Western’s net loss through third quarter 2008, due primarily to further impairments of their collateralized debt obligations (CDOs). The company’s investment losses—including these impairments—has led to a significant decline in its absolute and risk-adjusted capitalization.” In addition Best said it “anticipates that Great Western’s balance sheet will remain under financial pressure, as additional investment impairments are possible going forward. The company currently has a significant unrealized loss position in its fixed income portfolio, including its CDOs.” The bulletin also noted that “Great Western is evaluating several options to restore its capital position, and A.M. Best expects a solution will be in place by year end. Absent any improvement in capital by that time, the ratings will be downgraded. The ratings will remain under review pending A.M. Best’s evaluation of the capital solution to determine if capitalization can be restored to levels commensurate with the current ratings.”
A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and the issuer credit rating of “a” of Florida-based Seven Seas Insurance Company, Inc. with a stable outlook. Best said: “The ratings reflect Seven Seas’ outstanding profitability, supportive capitalization and management’s specialty underwriting expertise within the ocean and inland marine cargo market. The ratings also acknowledge the advantages derived from the company’s affiliation with Nicor, Inc. the synergies gained from Seven Seas’ effective low-cost distribution platform and preferential access to its insureds via the customer network of its affiliate, Tropical Shipping.”
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