A.M. Best Co. affirmed the financial strength rating (FSR) of A (excellent) and the issuer credit rating (ICR) of “a” of the American Safety Insurance Group (ASI) and its members. A.M. Best also affirmed the ICR of “bbb” of ASI’s parent company, American Safety Insurance Holdings Ltd. The outlook for all ratings is stable.
The rating is based on the consolidated financial condition and operating performance of the following entities comprising ASI: American Safety Casualty Insurance Co., American Safety Indemnity Co., American Safety Reinsurance Ltd. and American Safety Risk Retention Group Inc., which is reinsured by and shares common management with the related companies.
The ratings reflect the consolidated group's excellent capitalization, solid overall operating results and effective management of its insurance operations, A.M. Best says.
Ancon Insurance and Petroleum Casualty Group
A.M. Best Co. affirmed the FSR of A++ (Superior) and ICR of “aa+” of Ancon Insurance and Petroleum Casualty Group (Ancon) and its member companies, Ancon Insurance Co. Inc. and Petroleum Casualty Co. The outlook for both ratings is stable.
The ratings reflect the group's superior capitalization, consistently strong operating results and exemplary risk management strategies. The ratings also consider the extensive experience and level of commitment of Ancon’s parent, Exxon Mobil Corp., whose management incorporates the group as a core element in its overall risk management program. A.M. Best has taken a favorable view of Ancon’s overall profile within the parent’s structure and recognizes the benefits inured from this.
BNY Trade Insurance Ltd.
A.M. Best Co. revised the outlook to positive from stable and affirmed the FSR of A- (excellent) and ICR of “a-” of BNY Trade Insurance Ltd.
The ratings reflect BNY Trade’s strong capitalization, consistently positive operating results, conservative operating strategy and robust enterprise risk management (ERM) framework as it follows its parent’s, The Bank of New York Mellon Corp., ERM practices.
Fitch Ratings affirmed BUPA Insurance Ltd.'s (BIL) insurer financial strength (IFS) rating at A+ and long-term issuer default rating (IDR) at “A.” Fitch also affirmed BIL's GBP330m subordinated perpetual bond, issued by BUPA Finance plc, at “A-“ as this issue is guaranteed by BIL on a subordinated basis. The outlooks on the IFS rating and long-term IDR are stable.
Fitch views BIL's strong and stable underwriting profitability, which has held up comparatively well in the recessionary environment to date, as positive. While the UK portion of the insurance book experienced a slight deterioration in underwriting performance during 2009, with the loss ratio increasing to 83.4% at Q209 compared with 81.8% at Q208, BIL's international business retains its strong profitability.
A.M. Best Co. affirmed the FSR of A (Excellent) and ICR of “a” of First Capital Insurance Ltd. The outlook for both ratings is stable.
The ratings reflect First Capital’s excellent risk-adjusted capitalization and consistent operating profitability. The ratings also acknowledge management’s underwriting capability and its ability to manage profitable growth.
First Capital’s risk-adjusted capitalization remained solid in fiscal year 2008, as measured by both Best’s Capital Adequacy Ratio and Singapore’s local capital adequacy ratio (CAR). Nonetheless, the growth in asset and underwriting risk led to a reduction in First Capital’s CAR in 2008. In anticipation of its consistent growth in surplus, A.M. Best expects First Capital’s risk-adjusted capitalization in terms of BCAR to remain solid to support its moderate pace of premium expansion over the near term.
A.M. Best Co. removed from under review with negative implications and affirmed the FSR of A- (excellent) and ICR of “a-” of Forethought Life Insurance Co. (FLIC). The outlook assigned to these ratings is stable.
These rating actions reflect FLIC’s improved financial flexibility, positive statutory and GAAP operating income in the current year, streamlined corporate structure and improvement in the performance of its investment portfolio.
A.M. Best Co. affirmed the FSR of A- (excellent) and the ICR of “a-” of Hyundai Marine & Fire Insurance Co. Ltd. (HMFI). The outlook for both ratings is stable.
The ratings reflect the company’s favorable operating performance and capitalization. Over the past five years, HMFI has maintained its operating ratio of 95%. In fiscal year 2008, the company’s overall combined ratio stood at 102.9%, which is a 2.5 percentage point deterioration compared to the previous year. This is due mainly to the increase of the upfront commission payment to general agents to support the rapid growth in long-term insurance. The expense ratio rose to 27.2% in fiscal year 2008, from 22.3% in fiscal year 2007. The expense ratio is expected to stabilize as the sales growth from general agents slows down and the in-force business grows. The loss ratio stood at 75.8%, which is a two-percentage-point improvement year on year.
Kingsway Financial Services Inc. and its subsidiaries
A.M. Best Co. downgraded the ICR and senior debt ratings to “ccc” from “b-” of Kingsway Financial Services Inc. (KFSI) and Kingsway America Inc. (KAI). In addition, A.M. Best downgraded the financial strength rating (FSR) to B- (fair) from B (fair) and the ICRs to “bb-” from “bb” of several KFSI wholly owned property/casualty subsidiaries. All ratings, with the exception of Lincoln General Insurance Co. (Lincoln), which is unchanged, remain under review with negative implications.
The downgrading of the ratings of KFSI, KAI and selected operating subsidiaries reflects the continued deteriorating financial condition of the parent company through the first nine months of 2009. This is attributed to significant operating losses, primarily within discontinued or run-off operations. As a result, A.M. Best contends this has contributed to a further diminution of Kingsway’s business profile and that of its insurance operating companies.
Liberty Bankers Life Insurance Co. and its subsidiary
A.M. Best Co. removed from under review with negative implications and affirmed the FSR of B- (fair) and ICR of “bb-” of Liberty Bankers Life Insurance Co. (LBL) and its primary life insurance subsidiary, American Benefit Life Insurance Co. (formerly Mid-Continent Preferred Life Insurance Co.). Both companies are referred to collectively as Liberty Bankers. The outlook assigned to both companies is negative.
The rating actions for Liberty Bankers primarily reflect the recent substantial increase in surplus due to $17.65 million in cash and income producing real estate contributed by its ultimate parent, Realty Advisors Inc. In addition, the unrealized loss position in its fixed-income securities portfolio has improved over the most recent period.
PMG Assurance Ltd.
A.M. Best Co. affirmed the FSR of A (excellent) and ICR of “a” of PMG Assurance Ltd. (PMG). The outlook for both ratings is stable.
These ratings reflect the company's excellent capitalization, historically strong operating performance and strategic position as the captive insurance company for Sony Group. These strengths are partially offset by PMG’s exposure to potentially large natural catastrophe losses.
Principal Financial Group Inc. and its subsidiaries
A.M. Best Co. affirmed the FSR of A+ (superior) and the ICR of “aa-” of Principal Life Insurance Co. (PLIC) and Principal National Life Insurance Co. (PNL). Both companies are life insurance operating companies of Principal Financial Group Inc. A.M. Best also affirmed Principal’s ICR of “a-” as well as the group’s existing debt ratings. The outlook for all ratings is negative.
The rating actions reflect Principal’s dominant position in the United States defined contribution plan market, strong expense management, its diverse and sustainable earnings and improved investment product portfolio diversification, A.M. Best says. The ratings also reflect Principal’s well-established product lines, broad distribution, continued global growth and significant cash holdings at PFG.
Qatar General Insurance and Reinsurance Co. (S.A.Q.)
A.M. Best Co. revised the outlook to positive from stable and affirmed the FSR of B++ (Good) and the ICR of “bbb+” of Qatar General Insurance and Reinsurance Co. (S.A.Q.).
The positive outlook reflects S.A.Q.’s continued resilient operating performance, improving business profile and strong capital position during challenging economic conditions. Additionally, S.A.Q. has made progress developing its risk management framework. An offsetting factor is S.A.Q.’s concentration of investments in equities and real estate assets.
SGI CANADA Group and its members
A.M. Best Co. upgraded the FSR to A- (excellent) from B++ (good) and ICR to “a-” from “bbb+” of SGI CANADA Insurance Services Ltd. (SCISL). Additionally, A.M. Best upgraded the FSR to A- (excellent) from B++ (good) and the ICR to “a-“ from “bbb” of SCISL’s wholly owned subsidiary, Coachman Insurance Co. Furthermore, A.M. Best affirmed the FSR of A- (excellent) and ICR of “a-” of SCISL’s operating parent, SGI CANADA (SGI). These companies are members of the SGI CANADA Group. The outlook on all ratings remains stable.
A.M. Best affirmed the FSR of B++ (Good) and ICR of “bbb” of The Insurance Company of Prince Edward Island (ICPEI), a majority owned subsidiary of SCISL. The outlook on ICPEI’s ratings has been revised to negative from stable.
The ratings of the SGI CANADA Group are reflective of the group’s excellent risk-adjusted capitalization and sound balance sheet liquidity, consistently profitable operating performance, overall geographic and product line diversification as well as the benefits its derives from strong centralized management and consolidated support functions such as financial reporting, reinsurance procurement and investment management, the rating agency says. In addition, SGI CANADA maintains significant market share dominance in its home province of Saskatchewan.
Southern General Group (owned by Insurance House) and its members
A.M. Best Co. downgraded the FSR to B++ (good) from A- (excellent) and ICR to “bbb+” from “a-” of Southern General Group and its members, Southern General Insurance Co. and Southern General Underwriters Insurance Co. The outlook for these ratings is stable.
These rating actions follow the continued deterioration in Southern General’s underwriting and operating performance in recent years, impacted by increased weather events as well as competitive market conditions and economic factors, A.M. Best says. In response to these declining operating trends, various actions recently have been undertaken and planned by the group regarding expense management and underwriting initiatives in an effort to streamline operations and improve underwriting profitability.
Fitch Ratings removed from rating watch positive (RWP) and upgraded Southsure Assurance Ltd.'s IFS rating to BBB with a stable outlook.
The upgrade follows the completion of Fitch's review and reflects the agency's view of Southsure's importance to its parent Southland Building Society, which warrants an equalization of the ratings. In Fitch's opinion, Southsure is deemed to be “important” to the group from a strategic perspective, and in turn benefits from the financial strength of the larger organization.
Fitch Ratings affirmed its AA+ insurer financial strength ratings on State Farm Mutual Automobile Insurance Co., State Farm Life Insurance Co. (State Farm Life) and State Farm Life and Accident Assurance Co. The rating outlook is negative.
The rating outlook remains negative reflecting Fitch’s concerns regarding the absence of surplus growth from retained earnings and magnitude of underwriting losses relative to peers. An inability to grow surplus organically and/or underwriting results significantly worse than industry averages would put downward pressure on ratings.
Western Mutual Insurance Group and its members
A.M. Best Co. upgraded the ICR to “a+” from “a” and affirmed the FSR of A (excellent) of Western Mutual Insurance Pool and its members, Residence Mutual Insurance Co., Western Mutual Insurance Co. and Arizona Home Insurance Co. The outlook for all ratings is stable.
The upgrade of Western Mutual’s ICRs reflects its continuing production of excellent operating results, maintenance of strong risk-adjusted capitalization and extensive local market knowledge as a writer of personal property business, the rating agency says. The ratings also acknowledge the group’s conservative investment risk profile, favorable loss reserve development trends and strong operating cash flow measures.
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