A.M. Best Downgrades Rating of Clarendon Insurance Group.Business Editors/Insurance Writers OLDWICK, N.J.--(BUSINESS WIRE)--Nov. 4, 2003 A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) of Clarendon CLARENDON. The constitutions of Clarendon were certain statutes made in the reign of Henry H., of England, in a parliament holden at Clarendon, by which the king checked the power of the pope and his clergy. 4 Bl. Com. 415. Insurance Group (Clarendon) (Wilmington Wilmington. 1 City (1990 pop. 71,529), seat of New Castle co., NE Del., on the Delaware River and tributary streams, the Christina and the Brandywine; settled 1638, inc. as a city 1832. , DE) and its property/casualty affiliates. The outlook for the rating is stable. The downgrade Downgrade A negative change in the rating of a security. Notes: For example, an analyst may downgrade a stock from strong buy to buy, or a bond rating agency may downgrade a bond from AAA to AA. of Clarendon reflects the recent downgrade of its parent, Hannover Rueckversicherungs AG (Hannover Re Hannover Re (FWB: HNRGn), in German Hannover Rückversicherung AG, with gross premium of around €9 billion in 2006, is one of the five largest reinsurance groups in the world. Its headquarters are in Hanover, Germany. ) (Germany) to A (Excellent) from A+ (Superior) and the elevated credit risk maintained by Clarendon due to its above-average 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. recoverables. A.M. Best is concerned with the general decline in credit quality of the reinsurance sector, to which Clarendon is significantly exposed based on its business profile as a program writer that cedes a significant portion of its direct writings to its reinsurance partners. A.M. Best considers the protection afforded Clarendon by its parent with regard to the collection of reinsurance recoverables to be reduced, based on the elevated 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. leverage at Hannover Re. Nevertheless, Clarendon continues to benefit from its relationship with Hannover Re, but not to the extent supportive of the A (Excellent) rating. The stable rating outlook reflects Clarendon's established presence as a leading program writer, its strong operating results, steady surplus generation and management's efforts to reduce the group's credit risk in the near term. However, Clarendon will remain challenged as it strives to lower its credit risk without adversely affecting risk-adjusted 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. through increased retention levels. Clarendon operates as a program writer throughout 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. on both an admitted and surplus lines basis. Business is marketed through approximately 50 select managing general agents (MGAs) and general agents. The group operates through five insurers that provide commercial lines and personal lines coverages on an admitted basis, as well as through one surplus lines company. The financial strength rating of A (Excellent) has been downgraded to A- (Excellent) for Clarendon Insurance Group and the following members: -- Clarendon America Insurance Company -- Clarendon National Insurance Company -- Clarendon Select Insurance Company -- Harbor Specialty Insurance Company -- Redland Insurance Company 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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