A.M. Best Affirms Everest Re Ratings; Extends Group Rating to New Bermuda Affiliate.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 1, 2000 A.M. Best Co. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the A+ (Superior) financial strength rating of Everest Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Co. and its four insurance affiliates--Everest National Insurance Co., Everest Indemnity Insurance indemnity insurance Managed care A type of health insurance in which a Pt can choose the hospital and provider, and the insurer reimburses the Pt or provider for a set percentage of the cost, minus deductibles and co-payments Co., Everest Insurance Company of Canada and Southeastern Security Insurance Co. At the same time, A.M. Best has extended the rating to the group's newly formed Bermuda affiliate, Everest Reinsurance (Bermuda) Ltd., recognizing its strategic role as a member of the group providing complementary offshore capacity as well as the explicit capital commitment of the parent. A.M. Best also affirmed the "a" senior debt rating of the unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. obligations issued by Everest Reinsurance Holdings, Inc., the intermediate U.S. holding company of the Everest Re Group, Ltd. This rating action follows the completion of the final phase of the group's restructuring plan, which included the redomestication of the public holding company to Bermuda and the creation of Everest Reinsurance (Bermuda), Ltd.--a new Bermuda-based reinsurance affiliate to complement the group's strong U.S.-based operations. In addition, the group, through its intermediate U.S. holding company, completed its announced acquisition of Gibraltar Casualty Insurance Co., the run-off operation of Prudential Insurance Company. Gibralter had been utilized to provide the stop-loss cover initially established with Everest Re's IPO (Initial Public Offering) The first time a company offers shares of stock to the public. While not a computer term per se, many founders, employees and insiders of computer companies have found this acronym more exciting than any tech term they ever heard. in 1995. Through an arms-length loss portfolio transaction, Gibraltar, which has been renamed Mt. McKinley Insurance Company, has since transferred its net liabilities to Everest Reinsurance (Bermuda) Ltd., whose operations are best suited to optimize the group's return on the underlying portfolio. While A.M. Best is modestly concerned with the group's assumption of the Gibraltar liabilities and the discontinuance Cessation; ending; giving up. The discontinuance of a lawsuit, also known as a dismissal or a non-suit, is the voluntary or involuntary termination of an action. DISCONTINUANCE, pleading. A chasm or interruption in the pleading. 2. of the Prudential Guarantee, the associated reserves at Gibraltar have been significantly strengthened over the past eighteen months. In addition, the transaction includes a $200 million stop-loss cover provided by the Prudential, attaching at Gibraltar's carried reserve position. The stop loss cover is effective at the close of the transaction with 20% coinsurance A provision of an insurance policy that provides that the insurance company and the insured will apportion between them any loss covered by the policy according to a fixed percentage of the value for which the property, or the person, is insured. to protect against potential adverse development in Gibraltar's liabilities. A.M. Best believes the combination of these actions effectively insulates the company's balance sheet from prior accident year loss development. The group's ratings reflect its strong operating performance, franchise value, conservative but effective investment portfolio and moderate financial leverage, well supported by its debt-service capabilities. A.M. Best notes the group's improved operating profitability is driven by management's disciplined underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. , conservative exposure management and favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. expense platform. These strengths are partially offset by the challenges the group faces from a highly competitive reinsurance market and its start-up operation in Bermuda. In addition, the substantial re-underwriting process initiated in 1994 creates some reserve risk associated with the limited seasoning of its book of business. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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