A.M. Best Places Ratings of Platinum Under Review With Negative Implications; Downgrades Issuer Credit and Debt Ratings.OLDWICK, N.J. -- A.M. Best Co. has placed the financial strength rating of A (Excellent) of 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 Platinum Underwriters Holdings, Ltd. (Platinum) (Bermuda) under review with negative implications. Concurrently, A.M. Best has downgraded the issuer credit rating of the reinsurance subsidiaries to "a" from "a+" and of Platinum to "bbb" from "bbb+". Ratings assigned to the company's existing equity security units, as well as securities available under the company's current shelf offering, have also been downgraded. All debt ratings also remain under review with negative implications. (See below for a list of ratings.) These rating actions follow A.M. Best's year-end review of Platinum and its determination that the risk-adjusted capital position of the group has declined more than originally estimated from prior year levels due to the losses recognized from the southeast wind storms in 2004 and the resulting increase to the group's operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. . Platinum Underwriters Bermuda, Ltd (Platinum Bermuda), which assumes a significant amount of business from the group's other operating companies operating company A business that engages in transactions with outsiders. , has realized a disproportionate reduction in its risk-adjusted capital position. Platinum has provided A.M. Best with a plan to strengthen--in the near term--the financial position of the overall group as well as that of Platinum Bermuda. Should this plan be executed successfully, A.M. Best expects that the A (Excellent) financial strength rating will be 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. with a stable outlook. If management is unable to successfully complete this plan in the near term, the A (Excellent) rating of Platinum Bermuda will likely be downgraded and all other ratings and rating outlooks will be reevaluated. The financial strength rating of A (Excellent) has been placed under review with negative implications for the following 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. of Platinum Underwriters Holdings, Ltd.: --Platinum Underwriters Reinsurance, Inc. --Platinum Re (UK) Limited --Platinum Underwriters Bermuda, Ltd. The following debt rating has been downgraded and placed under review with negative implications: Platinum Underwriters Finance Inc.-- --to "bbb" from "bbb+" on $137.5 million in equity security units, due 2005 The following indicative ratings assigned to debt securities available under the $750 million shelf registration have been downgraded and placed under review with negative implications: Platinum Underwriters Holdings, Ltd.-- --to "bbb" from "bbb+" on senior unsecured debt Unsecured debt Debt that does not identify specific assets that the debtholder is entitled to in case of default. --to "bbb-" from "bbb" 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". --to "bb+" from "bbb-" on preferred shares Preferred shares Preferred shares give investors a fixed dividend from the company's earnings and entitle them to be paid before common shareholders. See: Preferred stock. 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 330 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. |
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