ACE Limited
A.M. Best Co. has revised the outlook to positive from stable, and affirmed the issuer credit ratings (ICR) of "a-" and senior debt ratings of ACE Limited (ACE) and ACE INA Holdings Inc.
Concurrently, A.M. Best has affirmed the financial strength ratings (FSR) of A+ (Superior) and ICRs of "aa-" of ACE Bermuda Insurance Ltd., ACE Tempest Reinsurance Ltd., ACE American Pool and its members, ACE INA Insurance and ACE European Group Limited. The outlook for the ICRs has been revised to positive from stable, while the outlook for the FSRs is stable.
A.M. Best also has affirmed the FSR of B- (Fair) and ICR of "bb-" of Century Indemnity Co., the run-off entity of ACE. The outlook for these ratings is stable.
Additionally, A.M. Best has affirmed the FSR of A+ (Superior) and ICR of "aa-" of ACE Tempest Life Reinsurance Ltd. (ATLRe). At the same time, A.M. Best has affirmed the FSR of A (Excellent) and ICRs of "a" of Combined Insurance Company of America and Combined Life Insurance Company of New York. The outlook for the ICRs has been revised to positive from stable, while the outlook for the FSRs is stable.
In addition, A.M. Best has downgraded the FSR to A- (Excellent) from A (Excellent) and ICR to "a-" from "a" of ACE Life Insurance Co. (Stamford, Conn.). The outlook for these ratings is stable. All companies are domiciled in Philadelphia, PA, unless otherwise specified. (See link below for a complete listing of the companies and ratings.)
The ratings of ACE and its core property/casualty operating companies reflect an organization that is well diversified by business segment and geography and is strongly capitalized, A.M. Best said. The organization maintains the capacity to generate significant cash flow and earnings in its domestic and overseas markets given its underwriting acumen. In addition, ACE's balance sheet remains stable through controlled financial leverage, a relatively conservative investment portfolio and favorable loss reserve developments in recent years.
Ageas Group
S&P has placed the following ratings on Ageas Group (formerly Fortis Group) entities on CreditWatch with negative implications:
• The 'A-' long-term counterparty credit ratings and issuer financial strength ratings on core operating entity AG Insurance (formerly Fortis Insurance Belgium)
• The 'BBB-/A-3' long- and short-term counterparty credit ratings on Ageas SA/NV and Ageas N.V., the Ageas group's two holding companies
• The 'A-' long-term counterparty credit ratings and insurer financial strength on the operating companies of Millenniumbcp-Fortis Grupo Segurador S.G.P.S. S.A. (MFGS)
Concurrently, S&P placed on CreditWatch with negative implication the ‘BBB’ long-term issue credit rating on Fortis Hybrid Financing's (FHF) issues (HYBRONE, NITSH I, and NITSH II) and the 'BB' long-term issue credit rating on Fortfinlux S.A.'s FRESH instrument.
"The negative implications on AG Insurance reflect our heightened concerns on the credit quality and concentration risk of its bonds portfolio, following the downgrades of a number of sovereign issuers in which they had invested, in particular Greece (BB+/Negative/B) and Portugal (A-/Negative/A-2)," said S&P's credit analyst Angelo Sacca.
The negative implications on the holding companies and the rated debt issues reflect those on the core operating entity, AG Insurance, S&P said. Our rating on the holding companies, Ageas SA/NV and Ageas NV, is derived from that on AG Insurance, with a three-notch difference. Our rating on the FHF debt issues is two notches below AG Insurance financial strength ratings, and the FRESH debt issues are rated two notches below the holding company's issuer credit rating.
AMERISAFE Inc.
A.M. Best Co. has affirmed the financial strength rating of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Amerisafe Insurance Group (Amerisafe) and its members. Amerisafe includes American Interstate Insurance Co., Silver Oak Casualty Inc. and American Interstate Insurance Company of Texas, all operating subsidiaries of AMERISAFE Inc. Concurrently, A.M. Best has affirmed the ICR of "bbb-" and debt ratings of AMERISAFE Inc. The outlook for all ratings is positive.
The ratings reflect Amerisafe's excellent capitalization, strong operating profitability, which outperforms the group's peer composite over the long term, its established market presence and experience operating as a workers' compensation market for high-hazard risks. The group's solid operating performance, A.M. Bset said, has been driven by its strong underwriting results given management's adherence to prudent underwriting and pricing discipline, focused loss control and safety programs and active claims management, which have allowed for favorable reserve development trends in recent years.
These positive factors are somewhat offset by Amerisafe's product concentration and historical adverse loss reserve development, which caused earnings volatility in earlier years. The positive rating outlook reflects A.M. Best's expectation that strong underwriting and operating results will be sustained over the near term, and capitalization will remain well supportive of Amerisafe's ratings.
S&P has affirmed the 'AA-' long-term insurer financial strength rating on France-based AXA Corporate Solutions Assurance, a subsidiary of global leading financial services provider AXA. The outlook is stable.
"Our affirmation reflects our revised assessment of AXA CS' status within AXA group to 'core' from 'strategically important,' according to our group methodology for core operating entities," said S&P's credit analyst Angelique Bayot. "We now consider AXA CS as core given its good track record of integration within the AXA group. In addition, we understand that the claims guarantee provided to AXA CS by AXA France IARD ceases to be in effect, which does not affect the rating on AXA CS."
S&P sees AXA CS' business and financial profiles as being increasingly in line with AXA group standards. The rating agency also said AXA CS plays an important role in AXA group's broad product offering to corporate clients, has tight links with property/casualty subsidiaries worldwide, contributes increasingly to group earnings, and has a management structure largely based on AXA group practices.
The stable outlook on AXA CS mirrors the stable outlook on AXA group core entities.
Berkley Life and Health Insurance Co.
A.M. Best Co. has assigned a financial strength rating (FSR) of A+ (Superior) and an issuer credit rating (ICR) of “aa-” to Berkley Life and Health Insurance Co. Berkley Life is a member company of W. R. Berkley Corp.. The outlook for both ratings is stable.
Berkley Life’s ratings reflect W. R. Berkley Corp.’s explicit net worth maintenance agreement and the progression of Berkley Life’s integration within the W. R. Berkley organization, according to A.M. Best. Berkley Insurance Group currently has an FSR of A+ (Superior) and an ICR of “aa-”. Berkley Life was established for the purpose of transferring accident and health business—primarily stop-loss—from existing W. R. Berkley property/casualty insurers to a fully licensed life/health insurance company to improve product identity and distribution relationships. The business is produced by Berkley Accident and Health LLC, which began writing health insurance coverages in 2006.
Berkley Life currently has a lack of actual operations, is in the process of filing products in various states, and thus has yet to achieve critical mass. Additionally, A.M. Best believes the company will face challenges in the current soft stop-loss market. Current pricing dynamics suggest a competitive stop-loss market with generally modest growth in new premium revenue.
Harleysville Group Inc. and its subsidiaries
A.M. Best Co. has upgraded the financial strength rating (FSR) to A (Excellent) from A- (Excellent) and issuer credit ratings (ICR) to "a" from "a-" of Harleysville Insurance (Harleysville), including the lead company of the group, Harleysville Mutual Insurance Company (Harleysville Mutual) and its property/casualty pooling affiliates.
Concurrently, A.M. Best has upgraded the FSR to A- (Excellent) from B++ (Good) and ICR to "a-" from "bbb+" of Harleysville Life Insurance Co. (Harleysville Life), a direct life/health subsidiary of Harleysville Mutual. In addition, A.M. Best has upgraded the ICR and debt ratings to "bbb" from "bbb-" of the 47% publicly traded downstream holding company, Harleysville Group Inc. (HGIC). The outlook for all ratings has been revised to stable from positive.
The ratings reflect Harleysville's excellent and improving risk-adjusted capitalization, solid operating performance and regional market franchise, as well as the benefits derived from management's corrective actions taken since 2004, A.M. Best said.
Partially offsetting these positive factors is the higher than average combined ratio over the past five-year period (albeit improved), its ongoing exposure to earnings volatility from adverse weather conditions in its principal operating territories, as well as the near-term challenges associated with a highly competitive property/casualty environment.
A.M. Best finds Harleysville's focus on underwriting discipline, growing use of sophisticated predictive analytic modeling tools, prudent management of catastrophe exposures, well-established agency relationships, strong name recognition and stable market presence to be contributing drivers to the group's improvement in earnings and overall capitalization levels.
A.M. Best Co. has revised the outlook to stable from negative, and affirmed the financial strength rating of A+ (Superior) and issuer credit ratings of "aa-" of Banner Life Insurance Co. (Banner Life) and William Penn Life Insurance Company of New York (William Penn Life). Banner Life and William Penn Life are collectively referred to as Legal & General America Inc. (LGA), which represents the U.S. operations of its parent, Legal & General Group Plc, a worldwide insurance organization headquartered in the United Kingdom.
The revised outlook of LGA reflects the improved financial performance and risk-adjusted capital of Legal & General following the financial market rebound.
The ratings for Banner Life and William Penn Life reflect their strong competitive position in the U.S. term life market, profitable operations on a GAAP and international reporting basis, sufficient capitalization and high quality investment portfolio, A.M. Best said. Additionally, the companies benefit from an efficient expense structure and a disciplined approach to mortality underwriting. The ratings also recognize both companies status as key subsidiaries of Legal & General, which has historically provided the capital necessary to support new business growth in the United States.
PMI Group Inc.
S&P has assigned its 'CCC+' rating on PMI Group Inc.'s (PMI) issuance of $261 million in senior convertible notes, due in April 2020. The issuance does not affect the 'CCC+' counterparty credit rating on PMI. The outlook on the company remains negative.
The net proceeds, including the concurrent 77,765,000-share common stock offering, are expected to total $706 million. Standard & Poor's expects that PMI will use $75 million of the proceeds to pay a portion of its indebtedness under its credit facility and $35 million-$45 million of the proceeds for working capital and general corporate purposes. In addition, we expect PMI to downstream the remaining net proceeds to PMI Mortgage Insurance Co. (PMI MIC).
The outlook on PMI and PMI MIC is negative. Despite signs of improvement in the macroeconomy, the U.S. economy remains fragile. Although PMI MIC's rate of new notices has declined recently, the extent of the operating losses it reported on April 25, 2010, relative to its peers remains a concern. If the economic recovery were to experience a setback, delinquencies likely would rise once again. S&P expects operating losses to continue through 2010 and into 2011.
United Fire & Casualty Group and its P&C members
A.M. Best Co. has revised the outlook to negative from stable and affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings of "a" of United Fire & Casualty Group (UFCG) and its five property/casualty members, which operate under an intercompany pooling agreement led by United Fire & Casualty Co. (UFCC).
Concurrently, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of "a-" of United Life Insurance Co. (ULIC), a wholly owned subsidiary of UFCS. The outlook for these ratings is stable.
The revised outlook for UFCG reflects the decline in the group's reported underwriting and operating results in recent years, related primarily to the adverse development in 2008 and 2009 of claims related to Hurricane Katrina in Louisiana, and an increase in general liability development, including claims for construction defect. The decline has been relative to both UFCG's own historic norms and to the average of the commercial casualty composite. While continued adverse development of the Katrina-related claims is anticipated, should other underwriting and operating results not meet or exceed historic norms, there is potential for negative rating actions.
Fitch has revised Zurich Insurance Co.'s (ZIC) outlook to stable from negative. The agency affirmed the company's Insurer Financial Strength (IFS) rating at 'A+' and its Long-term Issuer Default Rating (IDR) at 'A'. ZIC is considered to be a core part of the Zurich Financial Services (ZFS) group.
The outlook revision reflects the strong recovery of ZFS's capital adequacy during 2009, and Fitch's view that the group's level of capitalization is again in line with expectations for the current rating level. It also reflects ZFS's continued strong earnings generation as well as the stabilization of the economic environment and therefore improving operating conditions.
Fitch recognizes that the improvements in capital adequacy substantially reflect the increase in shareholders' funds of 34% in 2009. This was mainly driven by unrealized gains on investments of $3.3 billion, resulting from narrowing credit spreads and rising stock prices, and retained earnings of $3.2 billion, which were only partly offset by dividend payments of $1.4 billion. The increase was further supported by favorable currency translation adjustments of $900 million, and a $1.3 billion share capital issue used to fund the AIG PAG acquisition.
Financial leverage is relatively high but remains within acceptable levels for the current rating level. Further, operationa
