A.M. Best Co. released ratings updates. The following are some of the most recent:
A.M. Best Co. placed the financial strength rating (FSR) of A- (excellent) and issuer credit rating (ICR) of “a-” of Continental American Insurance Co. under review with positive implications following the announcement that Aflac Inc. has signed a definitive agreement to purchase Continental American and its parent holding company, Continental American Insurance Group.
A.M. Best’s rating actions reflect Aflac’s proposed fourth quarter 2009 purchase of both companies for $100 million in cash. With the acquisition, Aflac will gain access to the group supplemental insurance market, which will complement its market-leading position in the U.S. payroll deduction market. Continental American will be the platform for Aflac’s group worksite products going forward.
A.M. Best Co. has commented that the FSR of A- (excellent) ICR of “a-” of FPIC Insurance Group and its members are unchanged. Concurrently, A.M. Best has commented that the ICR of “bbb-” of FPIC Insurance Group’s parent, FPIC Insurance Group Inc. (FPIC) also is unchanged following the announcement that FPIC has entered into a definitive agreement to acquire Advocate, MD Financial Group Inc., its subsidiary, Advocate, MD Insurance of the Southwest Inc. and Advocate, MD’s other non-insurance subsidiary.
Under the terms of the agreement, FPIC will pay Advocate, MD $33.6 million in cash at the closing of the transaction, and up to $12 million in additional consideration depending on the performance of Advocate, MD during the two-year period following the transaction. FPIC intends to operate Advocate, MD as an independent subsidiary with its current management team in Texas, where Advocate, MD’s primary subsidiary is the fourth-largest provider of medical professional liability (MPL) insurance. The company also writes MPL insurance in Mississippi.
Fitch Ratings also reviewed FPIC Insurance Group's planned acquisition of Advocate, MD Financial Group Inc. and expects this transaction will have no impact on FPIC's current rating and outlook.
A.M. Best Co. affirmed the Best’s Syndicate Rating of A (excellent) and the ICR of “a+” of Lloyd’s Syndicate 3000. The outlook on both ratings remains stable.
The ratings reflect the financial strength of the Lloyd’s market, which underpins the security of all Lloyd’s syndicates. In addition, A.M. Best believes the syndicate’s financial flexibility is enhanced by the continued support of Markel Corp., the ultimate parent company of its managing agent, Markel Syndicate Management Ltd., and its capital provider, Markel Capital Ltd.
A.M. Best Co. revised the outlook to negative from stable, and affirmed the FSR of A (excellent) and the ICR of “a” of Macau Insurance Co. Ltd. (MIC). At the same time, A.M. Best downgraded the FSR to A- (excellent) from A (Excellent), and the ICR to “a-” from “a” for MIC’s subsidiary, Macau Life Insurance Co. Ltd. The outlook for these ratings has been revised to negative from stable.
The revised outlook for MIC reflects the unfavorable trend of the underwriting performance and a significant reduction in premium portfolio size.
A.M. Best Co. affirmed the FSR of A (excellent) and the ICR of “a” of Markel International Insurance Co. Ltd. (MIICL). The outlook on both ratings remains stable.
MIICL is expected to maintain excellent standalone risk-adjusted capitalization in 2009 and into 2010 despite large investment losses incurred in 2008. In addition, A.M. Best believes MIICL benefits from the explicit support and financial flexibility of its publicly listed ultimate parent, Markel Corp. (Markel), which has contributed capital of approximately $200 million over the last six years, including $15 million during 2008. MIICL and Lloyd’s Syndicate 3000 account for approximately 30% of the Markel group’s gross premium income and provide the group with access to UK, London market and international business.
A.M. Best Co. has affirmed the FSR of A- (excellent) and ICR of “a-” of SALAMA Islamic Arab Insurance Co. The outlook for both ratings is stable.
The ratings of SALAMA reflect its solid business profile and strong, albeit lower, risk-adjusted capitalization. An offsetting factor is the underperformance of its investment portfolio in 2008, which led to overall losses, according to the rating agency.
A.M. Best Co. revised the outlook to negative from stable, and affirmed the FSR A (excellent) and the ICR of “a” of Sirius International Insurance Corp.
The revised outlook reflects the change in Sirius’ risk profile following the decision of its ultimate parent, White Mountains Insurance Group Ltd., to release most of the capital from White Mountains Re Bermuda Ltd. (WMRe Bermuda) and form a Bermudian branch of Sirius. Sirius’ risk-adjusted capitalization is likely to remain strong in 2009, despite some negative impact from absorbing additional property catastrophe business from WMRe Bermuda. Nevertheless, A.M. Best is concerned that the new business from WMRe Bermuda may lead to greater than expected volatility in performance due to an increase in Sirius’ catastrophe exposure.
TOWER Ltd. and its subsidiaries
A.M. Best Co. affirmed the ICR of “bbb-” of TOWER Ltd. At the same time, A.M. Best has affirmed the FSR of A- (excellent) and ICR of “a-” of TOWER Ltd. subsidiaries: TOWER Insurance Ltd. (TIL), TOWER Health & Life Ltd. (THL) and TOWER Life (N.Z.) Ltd. The outlook for all ratings is stable. All companies are domiciled in New Zealand.
The ratings reflect the group’s continued operating profitability and stable risk-adjusted capitalization.
White Mountains Insurance Group Ltd. and its subsidiaries
A.M. Best Co. affirmed the ICR of “bbb” of White Mountains Insurance Group Ltd. (White Mountains) and the ratings of its subsidiaries.
As previously mentioned, A.M. Best revised the outlook to negative from stable of its reinsurance subsidiary, Sirius International Insurance Corp. The outlook for all remaining ratings is stable.
The affirmation of the ratings on White Mountains and its subsidiaries follows today’s announcement of the company’s planned reorganization, whereby White Mountains Re Bermuda Ltd. will be contributed to Sirius, with its business and infrastructure transferred to Sirius’ newly established Bermuda branch, and White Mountains Reinsurance Co. of America’s property quota share to WMRe Bermuda will be novated to Sirius.
A.M. Best Co. affirmed the FSR of A (excellent) and the ICR of “a” of W.R. Berkley Insurance (Europe) Ltd. (WRB Europe). The outlook on both ratings remains stable.
A.M. Best expects WRB Europe to maintain strong stand-alone risk-adjusted capitalization in 2009, supported by the full ret ntion of earnings. The ratings also reflect the implicit support provided by the company’s ultimate parent, W.R. Berkley Corp. (WRB), which maintains excellent risk-adjusted capitalization. A.M. Best believes WRB Europe remains strategically important to its parent company as its source of geographic diversification and growth outside the United States.
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