A.M. Best Co. affirmed the financial strength rating (FSR) of A- (excellent) and issuer credit rating (ICR) of “a-” of Majestic Insurance Co. Additionally, A.M. Best has affirmed the FSR of B++ (Good) and ICR of bbb of Twin Bridges (Bermuda) Ltd. Both companies are subsidiaries of CRM Holdings Ltd.
The ratings of Majestic reflect its solid capitalization, profitable operating results, stabilization of its loss reserves and its expertise within its specialty workers’ compensation markets.
A.M. Best also affirmed the ICRs of bbb- of CRM Holdings, Embarcadero Insurance Holdings Inc. and CRM USA Holdings Inc. (CRM USA). Concurrently, A.M. Best affirmed the debt ratings of bb on the trust preferred securities of CRM USA and the surplus notes of Embarcadero. The outlook for all ratings is negative.Equitable Life & Casualty Insurance Co.
A.M. Best Co. revised the outlook to negative from stable and affirmed the FSR) of B++ (Good) and ICR of bbb of Equitable Life & Casualty Insurance Co.
The revised outlook reflects Equitable Life & Casualty’s recent net losses reported and an associated decline in risk-adjusted capital within the past year due primarily to strengthening of long-term care reserves, higher expenses related to marketing new products and realized capital losses incurred on investments. A.M. Best anticipates that the company will continue to report operating losses for at least the near term.
A.M. Best Co. assigned a debt rating of bbb to the forthcoming CAD 400 million (U.S. $368 million) 7.5% senior unsecured fixed rate notes due 2019 to be issued by Fairfax Financial Holdings Ltd. The outlook for the rating is stable.
Fairfax’s pro-forma unadjusted debt-to-total capital ratio is expected to increase modestly to 26.8% following the transaction, compared to 23.7% on June 30, 2009 (U.S. GAAP), according to the rating company. This calculation includes the debt of Odyssey Re Holdings Corp., a majority-owned public company capable of servicing its debt. The financial leverage and coverage ratios remain well within A.M. Best’s guidelines for its debt ratings.
A.M. Best Co. downgraded the FSR to B- (fair) from B (fair) and ICR to bb- from bb of Farmers’ Mutual Insurance Co. The outlook for both ratings is negative.
The ratings reflect Farmers’ Mutual’s continued unfavorable operating performance trends that have caused surplus losses for five consecutive years, as well as its geographic concentration of risk within the northwestern portion of the lower peninsula of Michigan. This location exposes the company to frequent and severe weather-related events.
A.M. Best Co. assigned a debt rating of bb+ to $165 million series B 8.207% junior subordinated deferrable interest debentures due Feb. 3, 2027 issued in exchange for the AFC Capital Trust I same debentures, which were outstanding as of July 30, 2009 of The Hanover Insurance Group Inc. The outlook for the rating is stable.
Concurrently, A.M. Best has withdrawn the debt rating of bb+ on AFC Capital Trust I’s $309 million aggregate principal amount of series B junior subordinated deferrable interest debentures due Feb. 3, 2027 of THG.
On July 30, 2009, THG terminated AFC Capital Trust I and issued the new debentures. In addition, THG repurchased $77 million of senior debt, which has resulted in financial and debt leverage ratios well below A.M. Best’s tolerance levels.
A.M. Best Co. has assigned a FSR of A- (excellent) and ICR of “a-” to IGI Insurance Co. Ltd. (IGI), which operates through an intercompany quota share reinsurance arrangement with AmTrust International Insurance Ltd. The outlook for both ratings is positive.
The ratings reflect IGI’s solid capitalization, improved operating performance within its niche market segments and the benefits derived from its publicly traded parent, AmTrust Financial Services Inc., including access to additional capital should it be needed to support IGI’s operations. Additionally, the ratings recognize the reinsurance support afforded through an intercompany quota share reinsurance agreement with AII, AFSI’s reinsurance subsidiary. Under the contract, AII reinsures 70% of IGI’s net written premiums and incurred losses.
Fitch Ratings today affirms the BBB senior debt rating of Marsh & McLennan Cos. Inc. (MMC). Fitch also affirms MMC's long-term issuer default rating (IDR) and short-term IDR at BBB and F2, respectively. The rating outlook is stable.
MMC's financial flexibility has improved significantly over the past several years, Fitch says. MMC's net debt (total debt less cash and cash equivalents) has improved markedly over the past three years, partially due to proceeds from the mid-2007 sale of Putnam Investments, but also as a result of MMC significantly reducing its debt load over the same period. MMC maintained approximately $1.3 billion of cash and cash equivalents on its balance sheet as of June 30, 2009.
This flexibility remains a key factor supporting MMC's existing ratings, given that deterioration in MMC's debt-to-EBITDA and operating earnings-based interest coverage ratios during 2008 led these key credit metrics to fall below Fitch's comfort level for the current rating category.
Fitch's ratings for MMC also reflect the company's favorable competitive position as one of the world's largest financial services firms, with major operations in insurance brokerage, consulting and risk consulting and technology.
Nationwide Mutual Insurance Co.
A.M. Best Co. assigned a debt rating of “a” to the $700 million 9.375 % fixed rate surplus notes due Aug. 15, 2039 of Nationwide Mutual Insurance Co. The outlook for the rating is negative.
The negative outlook reflects the challenges faced by Nationwide Mutual’s management to rebuild surplus and increase risk-adjusted capitalization following the significant weather-related and investment losses of 2008 and the early 2009 privatization of Nationwide Financial Services Inc.
A.M. Best Co. affirmed the FSR of A (excellent) and ICR of “a” of Professionals Direct Insurance Co. (PDI) and Verlan Fire Insurance Co. The outlook for all ratings is stable.
In addition, PDI and Verlan are now members of Hanover Insurance Group Property and Casualty Cos. PDI was acquired by The Hanover Insurance Group Inc. in 2007, and Verlan in 2008. The ratings for PDI and Verlan reflect Hanover’s strong risk-adjusted capitalization, through a 100% quota share reinsurance agreement.
Fitch Ratings has downgraded the IDR of Progressive to A+ from AA-. Additionally, Fitch downgraded Progressive’s senior debt ratings to 'A' from A+.
Fitch has also downgraded Progressive's operating subsidiaries insurer financial strength (IFS) rating to AA from AA+. The rating outlook is stable for all ratings.
The rating action reflects a decision by Fitch to afford increased weighting in its analysis of Progressive’s capital strength to the company's notional leverage ratios, which have historically been high relative to peers, as well as the company's monoline nature.
Accordingly, the downgrade is based exclusively on a change in how criteria is being applied by Fitch, and does not relate to deterioration in Progressive’s financial profile. The change in criteria application is designed to better capture the impact of unforeseen tail events.
