Ratings Roundup: DTRIC, Utica, Atradius NJ

May 11, 2009

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and the issuer credit rating of “a-” of Hawaii’s DTRIC Insurance Company Limited, both with stable outlooks. “The ratings,” said Best, “reflect DTRIC’s continued improvement in capitalization, well established agency relationships and stable claim experience. The ratings also recognize the financial support of Aioi Insurance Company, Limited through its participation on DTRIC’s major reinsurance arrangement and distribution channel, where DTRIC enjoyed a competitive advantage in developing automobile business with Toyota Motor Corporation—Aioi’s majority shareholder. DTRIC’s loss ratio remained stable in 2008, while its net earnings fell by 79 percent to $ 0.68 million, translating into a negative 4.8 percent return on equity, due to a higher expense ratio and lower yield from invested assets.” Best also noted that “slower premium expansion relative to surplus growth has led to an increase in DTRIC’s risk-based capitalization, as measured by Best’s Capital Adequacy Ratio (BCAR) over the past five years. Notwithstanding the operating deficit in 2008, the decline in risk premium has dragged down the net premium leverage from 1.3 times in 2006 to 1.1 times in 2008.”

A.M. Best Co. has upgraded the financial strength rating to ‘A’ (Excellent) from ‘A-‘ (Excellent) and issuer credit rating to “a” from “a-” of New York-based Utica First Insurance Company, and has revised the outlook to stable from positive. “The rating actions reflect Utica First’s successful underwriting initiatives that have led to six years of consistently profitable underwriting results,” said Best. “The company’s strong return measures and loss ratios that are favorable to its commercial casualty peers; and strong capitalization that has consistently improved over a five-year period.” However, best also indicated that the “positive rating factors are partially offset by Utica First’s geographic concentration, the potential impact of weak economic conditions affecting its contractor’s book of business and the potential impact of both natural and man-made catastrophe losses. Nonetheless, operating results over the past 10 years have not been impacted by weather-related losses, and its September 11 losses were relatively modest given its New York City writings.” Best add that the “rating outlook reflects Utica First’s strong capitalization” as well as Best’s “expectation that current solid underwriting results will continue during the medium term.”

A.M. Best Co. has assigned a financial strength rating (FSR) of ‘A’ (Excellent) and an issuer credit rating (ICR) of “a” to Atradius Trade Credit Insurance Company, New Jersey. The outlook assigned to both ratings is stable. ATCI-NJ is a wholly owned subsidiary of Atradius Trade Credit Insurance, Inc. (ATCI) of Baltimore, MD, which has an FSR of ‘A’ (Excellent) and an ICR of “a”. Best said the “ratings assigned to ATCI-NJ reflect the operating support provided by ATCI through its 100 percent quota share reinsurance contract and its service agreement with ATCI-NJ.” The rating agency also noted that ATCI and ATCI-NJ’s ultimate parent, the Netherlands-based Atradius N.V., “is a leading international trade receivables insurer with a strong global presence. ATCI is a leading provider of accounts receivable credit insurance products in the United States.”

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