A.M. Best Removes Alea Group and Its Subsidiaries from Under Review; Downgrades Financial Strength and Issuer Credit Ratings.OLDWICK, N.J. -- A.M. Best Co. has downgraded the financial strength rating to B++ (Very Good) from A- (Excellent) and the issuer credit rating to "bbb" from "a-" of the insurance and 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. 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 Alea Group Holdings (Bermuda) Ltd (collectively referred to as Alea Group or Alea). This rating action removes the under review status of the rating, which occurred in June 2005. The rating applies to Alea London Limited, Alea (Bermuda) Limited, Alea Europe Limited, Alea North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. Insurance Company, Alea North America Specialty Insurance Company, Alea Global Risk Limited and Alea Jersey Limited. The outlook for all ratings is negative. A.M. Best believes that compound annual growth in net premiums written of 60% between 2001-2004 and significant reserve shortfalls from prior 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. years, which have greatly weakened operating performance, have placed a strain on the company's risk-adjusted capitalisation. A.M. Best remains concerned about Alea's ability to significantly improve performance to the level required to sustain capitalisation going forward. Although premium levels are expected to decline as a result of changes to Alea's business plan and its diminished business profile, the company has insufficient capital to maintain an A- (Excellent) financial strength rating, taking into account the potential for further poor operating performance. The company unlikely will be able to address this issue by raising additional capital in 2005. A.M. Best expects Alea's future performance to continue to deteriorate de·te·ri·o·rate v. 1. To grow worse in function or condition. 2. To weaken or disintegrate. as a result of expenses pressure due to declining business volumes, catastrophe experience in the second half of 2005 and the possibility of further deterioration in prior year reserves. Combined, these factors could lead to performance considerably below the group's long-term target of a 12%-15% post tax return on capital and surplus. A.M. Best anticipates a decline in gross premiums written When a non-life insurance company closes a contract to provide insurance against loss, the revenues (premiums) expected to be received over the life of the contract are called gross premiums written. in 2005 of above 10%, reflecting restructuring of the company's underwriting, management of exposure and withdrawal from certain poorly performing classes. Further ahead, Alea's access to certain business classes and territories will be detrimentally affected by concerns relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc its recent performance. 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 www.ambest.com/ratings. 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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