A.M. Best Affirms Ratings of Faraday Reinsurance Co. Limited.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 ratings of A++ (Superior) and the issuer credit rating of "aa+" of Faraday faraday /far·a·day/ (F ) (far´ah-da) the electric charge carried by one mole of electrons or one equivalent weight of ions, equal to 9.649 × 104coulombs. far·a·day n. 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. Limited (Faraday) (United Kingdom), a subsidiary of Cologne Re Group (Germany). The outlook for both ratings is stable. The affirmation of Faraday's ratings reflects the guarantee provided by the parent company, which A.M. Best expects to be amended to contain a notice period of one year, in line with A.M. Best's rating 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. methodology. The ratings also consider Faraday's strengthening balance sheet, stable profits and adherence to stringent 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. discipline. Faraday maintains strong stand-alone risk-adjusted capitalisation and is likely to continue to improve in 2006 from full retention of cumulative earnings, extremely low level of reinsurance dependency and a reduction in capital required to support underwriting arising from a fall in anticipated net premiums written in 2006. A.M. Best expects excellent returns on net premium of 32% in 2006, compared to 36% in 2005. Although a higher combined ratio in the region of 100% is likely (compared to 90% in 2005), underwriting performance will continue to be enhanced by investment returns. Going forward, A.M. Best anticipates Faraday's reserving approach to remain prudent. A.M. Best anticipates that gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. will fall 20% in 2006 as the company maintains underwriting discipline in a softening market. During 2005, the company's account expanded to include a direct employers and public liability account, which represents 37% of 2006 gross premiums, in addition to the existing liability reinsurance account. Despite Faraday's focus on liability lines, A.M. Best believes the company's more volatile subscription market reinsurance account is balanced by sourcing direct small ticket SME (1) (Small and Medium-sized Enterprise) See SMB. (2) (Subject Matter Expert) An individual who is well-versed in the policies and procedures of a particular department or division. business through delegated authorities Delegated authority is an authority obtained from another that has authority since the authority does not naturally exist. Typically this is used in a government context where an organization that is created by a legitimate government, such as a Board, City, Town or other located around the country. A.M. Best believes that a disadvantage of the company's specialist approach is the concentration of risks written in the long tail liability sectors, where awards inflation can materially impact performance in future years. For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. 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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