A.M. Best Affirms TIG Reinsurance On Completion of Acquisition by Fairfax.OLDWICK, N.J.--(BUSINESS WIRE)--May 10, 1999-- A.M. Best Co. today affirmed and removed from under review the A (Excellent) rating of TIG n. 1. A game among children. See Tag. 2. A capacious, flat-bottomed drinking cup, generally with four handles, formerly used for passing around the table at convivial entertainment. 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. This action follows the completion of Fairfax Financial Holdings Fairfax Financial Holdings Limited TSX: FFH.SV NYSE: FFH is a Toronto, Ontario based financial services holding company which, through its subsidiaries, is engaged in property, casualty and life insurance and reinsurance, investment management and insurance claims Ltd.'s acquisition of TIG Holdings Inc. and its operating subsidiaries An operating subsidiary is a business term frequently used within the United States railroad industry. In the case of a railroad, it refers to a company that is a subsidiary but operates with its own identity and rolling stock. for $850 million in cash. TIG Holdings is the parent company of Stamford, Conn.-based TIG Re. The affirmation reflects the strength and commitment of Fairfax, which provides significant financial flexibility; an expanded global reinsurance network; and over $1.6 billion of surplus dedicated to its reinsurance business. It is expected that TIG Re will be integrated with the Odyssey Re Corp., strengthening Odyssey Re's market position in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. . Effectively, the combined U.S. operation will become the flagship operation of the Odyssey Re Group--which is owned by Fairfax--and its separate ratings will likely be equalized in the future. Finally, TIG Re benefits from Fairfax's explicit support and financial guarantee, which apply to all Odyssey Re companies. Beyond the positive implications of the Fairfax acquisition, TIG Re's stand-alone rating reflects its excellent capitalization, improved earnings prospects and stabilized market profile. These strengths are derived from the company's bolstered loss reserves, earnings protection from third party indemnification and well-established core client relationships. The removal of recent ownership uncertainty should also enable the reinsurer re·in·sure tr.v. re·in·sured, re·in·sur·ing, re·in·sures To insure again, especially by transferring all or part of the risk in a contract to a new contract with another insurance company. to regain market momentum. Finally, TIG Re's risk profile is more favorable than many of its peers, given its below-average catastrophe risk and asbestos and environmental liability exposure. These strengths are offset by TIG Re's below-average underwriting profitability, slowed market momentum, concentrated client base, higher reserve leverage and integration risk with Odyssey Re Corp., following 1998's sharp fall-off in premium volume. TIG Re also will be challenged by very competitive market conditions that may constrain the reinsurer's growth and profitability. Separately, Odyssey Re Group maintains an A- (Excellent) 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. , reflecting the group's extensive worldwide reinsurance capabilities, significant balance sheet strength and the benefits derived from being owned by Fairfax. However, A.M. Best is somewhat concerned about the impact of considerable underwriting losses at Odyssey Re (London) Ltd. and the financial implications of a highly publicized pub·li·cize tr.v. pub·li·cized, pub·li·ciz·ing, pub·li·ciz·es To give publicity to. Adj. 1. publicized - made known; especially made widely known publicised lawsuit with one of its larger producers. A.M. Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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