A.M. Best Downgrades Ratings of Inter-Ocean.OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to A- (Excellent) from A (Excellent) and the issuer credit rating to "a-" from "a" for the 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. subsidiaries of Inter-Ocean Holdings Ltd. (Inter-Ocean) (Bermuda). The ratings apply to Inter-Ocean Reinsurance Company Ltd. (Bermuda) and Inter-Ocean Reinsurance (Ireland) Ltd. Additionally, A.M. Best has downgraded the issuer credit rating to "bbb-" from "bbb" of Inter-Ocean. All ratings have a negative outlook. These rating downgrades are a result of the February 17, 2005, rating action taken by A.M. Best on one of Inter-Ocean's principal retrocessionaires, American Re-Insurance Company (Wilmington, DE). American Re's financial strength rating was downgraded to A (Excellent) from A+ (Superior). Despite these actions, Inter-Ocean's ratings remain at the Excellent level, reflecting its non-risk retaining operating structure and the support it receives through its strategic relationships with its sponsoring shareholders who are comprised of recognized leaders in the insurance and reinsurance industries. Offsetting these strengths are the risk-adjusted capital position of the group, which has diminished di·min·ish v. di·min·ished, di·min·ish·ing, di·min·ish·es v.tr. 1. a. To make smaller or less or to cause to appear so. b. in recent years as the credit worthiness of some its most active retrocessionaires has been weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. . The negative rating outlook reflects A.M. Best's concern that even at its current rating level, Inter-Ocean's relatively modest level of shareholders' equity Shareholders' Equity A firms' total assets minus its total liabilities. Equivalently, it is share capital plus retained earnings minus treasury shares. Shareholders' equity is the amount by which a company is financed through common and preferred shares. will not be adequate to support further increases in its credit exposure or rating downgrades of its principal retrocessionaires. Additionally, the outlook is reflective Refers to light hitting an opaque surface such as a printed page or mirror and bouncing back. See reflective media and reflective LCD. of the increased regulatory scrutiny that the finite reinsurance Finite Reinsurance A type of reinsurance that transfers over only a finite or limited amount of risk. Risk is reduced through accounting or financial methods, along with the actual transfer of economic risk. market is experiencing and the impact this may have on Inter-Ocean's ability to generate deal flow. A.M. Best expects to complete its annual review of Inter-Ocean in the near term. 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 http://www.ambest.com/ratings. For current Best's Ratings, independent data and analysis on more than 470 reinsurance companies, please visit http://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 http://www.ambest.com. |
|
||||||||||||
Printer friendly
Cite/link
Email
Feedback
Reader Opinion