Arbella Insurance Group and its members
A.M. Best Co. upgraded the financial strength rating (FSR) to A- (excellent) from B++ (good) and issuer credit ratings (ICR) to “a-” from bbb+ of Arbella Insurance Group (Arbella) and its members. Arbella consists of Arbella Mutual Insurance Co., majority-owned subsidiaries Arbella Protection Insurance Co., Arbella Indemnity Insurance Co., Commonwealth Reinsurance Co., Covenant Insurance Co. (Southbury, CT) and reinsured affiliate Commonwealth Mutual Insurance Co. The outlook for all ratings has been revised to stable from positive.
The rating upgrades reflect Arbella’s surplus growth and strong risk-adjusted capitalization following its improved underwriting performance, which is due mainly to favorable loss experience and reduced underwriting leverage over the past several years.
A.M. Best Co. assigned an FSR of B+ (Good) and ICR of bbb- to Associated Mutual (AM). The assigned outlook is stable.
The ratings reflect AM’s position as a niche player in the public employees and labor union market in Michigan. The company exhibits strong potential for growth, and has high persistency measures, the rating agency says. Its capital balance and strong risk-based capital scores raise the potential for strategic business opportunities and alliances.
Aurigen Reinsurance Co. and Aurigen Reinsurance Ltd.
A.M. Best Co. affirmed the FSR of A- (excellent) and ICR of “a-” of Aurigen Reinsurance Co. and Aurigen Reinsurance Ltd. The outlook for all ratings is stable.
The ratings of Aurigen are based upon the start-up nature of the operation, which is focused on the Canadian life reinsurance marketplace and adequate capitalization, offset by a first-year operating loss.
Over the past year, the Canadian life reinsurance market has experienced some volatility in conjunction with the economic environment. Despite the global economic challenges, Aurigen successfully completed its first significant reinsurance transaction, and has indicated that it is gaining traction in concluding additional transactions.
A.M. Best Co. affirmed the FSR of A (excellent) and ICR of “a” of Beazley Insurance Co. Inc. (BICI) The outlook for both ratings is stable.
These ratings reflect BICI’s strong stand-alone, risk-adjusted capitalization, as well as the explicit support provided through quota share reinsurance agreements with Lloyd’s Syndicate 2623 and Lloyd’s Syndicate 623, which are managed by Beazley plc (Beazley) (Jersey). In addition, BICI benefits from third-party credit risk protection provided by Beazley.
A.M. Best Co. removed from under review with developing implications and affirmed the FSR of A (excellent) and ICR of “a” of BMO Life Assurance Co. (BMOLAC). The assigned outlook for both ratings is stable.
The rating actions follow the completion of A.M. Best’s review of the acquisition of BMOLAC (formerly AIG Life Insurance Company of Canada). The ratings were placed under review with developing implications following the announcement that Bank of Montreal (BMO) had agreed to purchase AIG Life Insurance of Canada from American International Group Inc. The company was renamed BMO Life Assurance Co. following the close of the transaction.
Fremont Insurance Co. and Fremont Michigan InsuraCorp Inc.
A.M. Best Co. upgraded the FSR to A- (excellent) from B++ (good) and ICR to “a-” from bbb+ of Fremont Insurance Co. (Fremont). A.M. Best also upgraded the ICR to bbb- from bb+ of its parent holding company, Fremont Michigan InsuraCorp Inc. The outlook for all ratings has been revised to stable from positive.
The ratings and outlook reflect Fremont’s solid capitalization, favorable operating earnings and its well-established presence as a writer of personal lines insurance in Michigan, the rating agency says. The company’s capital position reflects its moderate underwriting leverage, conservative investment risk profile and favorable loss reserve development. Strong underwriting results and steadily increasing investment income over the previous five-year period have driven Fremont’s operating earnings.
Grange Insurance Group and its members
A.M. Best Co. upgraded the FSR to A- (excellent) from B++ (good) and ICR to “a-” from bbb+ for the Grange Insurance Group (Grange) and its members, Grange Insurance Association and Rocky Mountain Fire & Casualty Co. The outlook for all ratings has been revised to stable from positive.
The ratings reflect Grange’s solid capitalization and favorable operating results due to revised business strategies and risk reduction, rate adequacy and improved reserve development, according to A.M. Best. These positive rating factors are partially offset by the group’s susceptibility to catastrophic events in the territories that it writes, compounded by competitive and regulatory pressures in those same territories. The group’s outlook is based on its solid capitalization, established distribution network, improved loss reserve adequacy and the expectation of continued favorable operating results.
Moody's Investors Service downgraded the ratings one notch to Aa2, two steps below AAA of Massachusetts Mutual Life Insurance Co. and its U.S. insurance units, citing pressures from investment losses on profit and capital, according to The Wall Street Journal.
According to the news service Moody's said it expects MassMutual's credit losses to continue into next year. The ratings outlook is stable; MassMutual was put on review for possible downgrade in May.
Fitch Ratings downgraded Mortgage Guaranty Insurance Corp.'s (MGIC) insurer financial strength (IFS) rating to BB- from BBB-. Fitch has simultaneously downgraded MGIC Investment Corp.'s (MGIC IC) long-term issuer rating to B- from “B”, and its senior notes to B- from “B.” All of the affected ratings have been removed from rating watch negative. The IFS and long-term issuer ratings have been assigned negative rating outlooks.
The downgrades are driven primarily by Fitch's concern regarding capital adequacy, business continuity and holding company liquidity. MGIC's third quarter 2009 results included a significant increase in the delinquency of full documentation prime mortgages that resulted in higher losses incurred at the operating company level.
Fitch Ratings affirmed Pacific Life Insurance Co.'s commercial mortgage-backed securities (CMBS) servicer ratings as follows:
• Primary servicer rating at CPS1
• Master servicer rating at CMS2+
• Special servicer rating at CSS2
The primary servicer rating is based on Pacific Life's demonstrated ability to effectively service mortgage loans in CMBS transactions, with a particular strength in servicing large loans, including A/B note structures, Fitch says.
The master servicer rating reflects Pacific Life's continued ability to oversee third-party servicers and report and remit to CMBS trustees. The special servicer rating is based on Pacific Life's experienced loan workout and asset management staff. Each of the ratings also considers the company's experienced and tenured management and staff and the financial strength of Pacific Life and its commitment to commercial mortgage servicing.
Torus Insurance Holdings Ltd. and its operating subsidiaries
A.M. Best Co. affirmed the FSR of A- (excellent) and ICR of “a-” of Torus Insurance (Bermuda) Ltd. (Torus Bermuda), Torus Insurance (UK) Ltd. (Torus UK) and Torus Specialty Insurance Co. (Torus Specialty). Concurrently, A.M. Best affirmed the ICR of bbb- of Torus Insurance Holdings Ltd. (Torus), the group’s ultimate parent holding company. The outlook for all ratings remains stable.
A.M. Best expects Torus to maintain strong consolidated risk-adjusted capitalization. Despite greater-than-anticipated growth of the group’s casualty portfolio, the overall volume of business written is lower than originally planned, driven by lower premiums from property and energy business. Stand-alone risk-adjusted capitalization at each of the group’s underwriting entities is also expected to remain strong.
A.M. Best Co. affirmed the FSR of A (excellent) and ICR of “a+” of Travelers Insurance Co. Ltd. (TIC) (United Kingdom).
A.M. Best expects TIC to maintain excellent stand-alone risk-adjusted capitalization in 2009, supported by a moderate increase in shareholders’ funds from GBP 506 million in 2008. In addition, the ratings factor explicit parental support in the form of a guarantee in respect of all TIC’s liabilities provided by St. Paul Fire and Marine Insurance Co., a subsidiary of its ultimate parent, The Travelers Cos. Inc.
A.M. Best Co. downgraded the FSR to B++ (good) from A- (excellent) and ICR to “bbb” from “a-” of Wayne Mutual Insurance Co. The outlook for these ratings is stable.
These rating actions follow Wayne’s continued decline in risk-adjusted capitalization due to a recent affiliation with Washington Mutual Insurance Association, combined with deteriorating underwriting results, primarily driven by weather-related events, A.M. Best says. The affiliation has resulted in an increased risk profile and elevated leverage measures for Wayne, as it is assuming 100% of Washington’s business, via a quota share agreement. It is anticipated that this will result in Wayne’s net written premium increasing by as much as 40% in the near term.
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