Ratings Roundup: MAPFRE Florida, Selective (stock/debt)

October 23, 2009

A.M. Best Co. has upgraded the financial strength rating (FSR) to ‘A’ (Excellent) from ‘A-‘ (Excellent) and the issuer credit rating (ICR) to “a” from “a-” of MAPFRE Insurance Company of Florida. Best also affirmed the FSR of ‘A-‘ (Excellent) and the ICR of “a-” of MAPFRE Insurance Company (MIC) of Florham Park, NJ. The outlook for all of the ratings is stable. MAPFRE Florida and MIC are wholly owned subsidiaries of The Commerce Insurance Company (CIC). CIC is a subsidiary of Commerce Group, Inc. (Commerce), and the lead company of Commerce’s inter-company pool. The subsidiaries of Commerce are ultimately owned by Spain’s MAPFRE S.A., a worldwide insurance and financial conglomerate with a presence in more than 40 countries. All of companies are domiciled in Webster, Mass., unless otherwise specified. Best explained that the “ratings of MAPFRE Florida reflect its strong risk-adjusted capitalization, recently improved operating performance and overall support provided by Commerce, particularly the explicit support afforded through participation in Commerce’s inter-company pooling agreement. These positive rating factors are partially offset by MAPFRE Florida’s concentration of business in Florida and its limited product scope, which is focused on commercial property lines.”

A.M. Best Co. has assigned indicative debt ratings of “a-” to senior unsecured debt, “bbb+” to subordinated debt and “bbb” to preferred stock, which may be issued under the recently filed and approved shelf registration statement of Selective Insurance Group, Inc. of Branchville, NJ. The outlook assigned to all ratings, however, is negative. “The new shelf registration replaces Selective’s previous shelf registration filed in September 2006, which was withdrawn simultaneously with the approval,” said Best, which has consequently withdrawn its ratings on the previous shelf registration. “Selective’s unadjusted debt-to-total capital ratio was 21.7 percent at June 30, 2009 (U.S.GAAP),” Best continued. The rating agency went on to state that, although Selective’s “financial leverage ratios” remain within Best’s guidelines for its debt ratings, the “coverage ratios are trending below the requirements for a holding company with an issuer credit rating (ICR) of “a-” Selective’s ICR of “a-” and existing debt ratings, as well as the financial strength rating of ‘A+’ (Superior) and ICRs of “aa-” of its insurance operating entities, are all unchanged. These ratings were assigned a negative outlook on May 20, 2009.”

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