A.M. Best Affirms Ratings of Montpelier Reinsurance Ltd. and Montpelier Re Holdings Ltd.; Revises Outlook to Stable.OLDWICK, N.J. -- A.M. Best Co. has affirmed 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 Montpelier 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. Ltd. (Montpelier) (Hamilton, Bermuda). Concurrently, A.M. Best has affirmed the ICR of "bbb-" and all existing debt ratings of Montpelier Re Holdings Ltd. (Montpelier Re) (Hamilton, Bermuda) [NYSE NYSE See: New York Stock Exchange : MRH MRH Memory Repeater Hub MRH Main Rotor Head (helicopters) MRH Multi-Resolution Homogenization MRH Mastic Roller Hybrid MRH Mataillos Rejuntaos de Hafen (MMO gaming guild) ]. The outlook for the ratings has been revised to stable from negative. (Please see below for a detailed listing of the ratings.) The affirmations and revised outlook follow A.M. Best's review of Montpelier's improved risk management and underwriting control systems following the 2005 catastrophe season, strengthening of risk-based capitalization and tangible reduction in the company's risk profile. Further supporting the ratings is Montpelier's highly experienced management team, customer-oriented focus and well established presence within the catastrophe market. Montpelier has implemented a prudent underwriting strategy to better manage the potential accumulation of losses from a single large catastrophic event. The underwriting strategy includes the reduction in writings of more volatile lines of business, purchasing more retrocessional protection, tightening aggregate policy limit constraints and reducing the company's net exposure to its modeled 1 in 250 year catastrophe events. Montpelier's management monitors theses underwriting constraints relative to capital based limits established by its Board of Directors and diversifies the company's exposure around the world to achieve an optimal spread of risk. Furthermore, as part of its risk mitigation strategy, Montpelier formed Champlain Limited during 2006. Champlain Limited provides reinsurance protection to Montpelier through a two tranche Tranche One of several related securities offered at the same time. Tranches from the same offering usually have different risk, reward, and/or maturity characteristics. tranche A class of bonds. $75 million catastrophe bond catastrophe bond A debt security with a payoff tied to the relative severity of a natural disaster such as a hurricane or earthquake. Bondholders are paid with insurance premiums but may have to accept reduced principal repayment in the event the specified for exposures to first event U.S. or Japanese earthquakes. Montpelier exhibits significant financial flexibility with access to both equity and debt markets. Montpelier's current financial leverage measures remain in line with its rating levels. A.M. Best expects the company to maintain financial leverage as measured by debt and preferred-to-total capital at 25% or below, while fixed charge coverage for low catastrophe years is expected to remain in the low double-digit range. Going forward, Montpelier will be challenged to maintain its competitive position as new capital enters the market and pricing begins to soften. A.M. Best will closely monitor the effectiveness of Montpelier's improved risk management controls and procedures with each catastrophic event relative to its market share and peer group. The FSR of A- (Excellent) and the ICR of "a-" have been affirmed for Montpelier Reinsurance Ltd. The ICR of "bbb-"has been affirmed for Montpelier Re Holdings Ltd. The following debt rating has been affirmed: Montpelier Re Holdings Ltd.-- -- "bbb-" on $250 million 6.125% senior unsecured notes, due 2013 The following indicative ratings have been affirmed under the shelf registration: Montpelier Re Holdings Ltd.-- -- "bbb-" on senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. -- "bb+" on subordinated debt Subordinated Debt A loan (or security) that ranks below other loans (or securities) with regard to claims on assets or earnings. Also known as "junior security" or "subordinated loan". -- "bb" on preferred stock Stock shares that have preferential rights to dividends or to amounts distributable on liquidation, or to both, ahead of common shareholders. Preferred stock is given preference over common stock. Holders of preferred stock receive dividends at a fixed annual rate. MRH Capital Trust I and II (guaranteed by Montpelier Re Holdings Ltd.)-- -- "bb" on preferred securities 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. |
|
||||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion