A.M. Best Affirms Ratings of Ariel Reinsurance and Assigns Rating to Ariel Holdings.OLDWICK, N.J. -- 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 financial strength rating (FSR (Free System Resource) In Windows 3.x, the amount of unused memory in various 64K blocks reserved for managing current applications. Every open window takes some space in this area. See Windows memory limitation. ) of A- (Excellent) and the issuer credit rating (ICR (Intelligent Character Recognition or Image Character Recognition) The machine recognition of hand-printed characters as well as machine printing that is difficult to recognize. ) of "a-" of Ariel 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. Company Ltd. (Ariel) (Bermuda). Concurrently, A.M. Best has assigned an ICR of "bbb-" to Ariel Holdings Ltd. (Bermuda). The outlook for all ratings is stable. The rating affirmations reflect Ariel's solid risk-based capitalization capitalization n. 1) the act of counting anticipated earnings and expenses as capital assets (property, equipment, fixtures) for accounting purposes. 2) the amount of anticipated net earnings which hypothetically can be used for conversion into capital assets. and its successful first year execution of operations within the parameters of the business plan presented to A.M. Best during last year's initial rating process. In addition to meeting A.M. Best's established requirements for new company formations, the ratings also reflect Ariel's ability to sustain A.M. Best's stricter risk-based capital requirements Risk-Based Capital Requirement A stated requirement of liquid reserves placed upon banks and institutions that deal in risky ventures. Notes: These requirements exist for the protection of investors who hold an interest in these types of businesses. for newly formed property catastrophe companies. A.M. Best's initial concerns regarding Ariel's existing infrastructure and risk management capabilities have been alleviated through its significant system enhancements regarding pricing, exposure accumulations and claims. The company has also successfully augmented its management and staff with the addition of seasoned personnel through its first year of operations. Overall, Ariel has adhered to its 2006 business plan, with some prudent adjustments made through the year to focus on pricing opportunities in certain regions while maintaining a rational risk profile. As part of the new company formation monitoring process, A.M. Best has been kept fully apprised of Ariel's progress. Despite these pricing opportunities, Ariel fell below its premium volume expectations for its first year of operations. As a result, risk-based capitalization remains solid, well within A.M. Best's initial expectations. In addition to being susceptible to low frequency high severity events, Ariel will continue to be challenged by increased competition from both established companies and other new start-ups in the industry. The additional capacity brought to the market will dampen expected returns Expected Return The average of a probability distribution of possible returns, calculated by using the following formula: over the cycle if pricing of reinsurance coverage fails to meet anticipated levels. Furthermore, the ability of Ariel to effectively build and retain market acceptance will only be proven over time. Accordingly, A.M. Best will continue to closely monitor the quarterly performance of Ariel against its stated business plan, and any material negative deviations in terms of management, earnings, capitalization or risk profile could result in downward pressure on the assigned ICR. For Best's Ratings Best's rating A rating A.M. Best Co. assigns to insurance companies based on the company's ability to meet its obligations to its policyholders. , an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 330 reinsurance companies, please visit www.ambest.com/reinsurance. 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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