A.M. Best Revises Issuer Credit Rating Outlook to Positive and Affirms Ratings of Validus Reinsurance, Ltd.
April 01 2016 - 4:02PM
Business Wire
A.M. Best has revised the issuer credit rating (ICR)
outlook to positive from stable and affirmed the financial strength
rating (FSR) of A (Excellent) and the ICR of “a” of Validus
Reinsurance, Ltd. (Validus Re) (Hamilton, Bermuda), a
subsidiary of Validus Holdings, Ltd. (Validus) (Hamilton,
Bermuda) [NYSE:VR]. Concurrently, A.M. Best has downgraded the ICR
to “a” from “a+” and affirmed the FSR of A (Excellent) of the
following Validus subsidiaries: Western World Insurance
Company, Stratford Insurance Company and Tudor
Insurance Company (all companies headquartered in Franklin
Lakes, NJ) to align the subsidiaries’ ICRs with that of Validus Re.
A.M. Best also has revised the outlook for each of these ICRs to
positive from stable. The outlook for the FSRs remains stable.
Additionally, A.M. Best has affirmed the FSR of A (Excellent)
and the ICR of “a” of Validus Reinsurance (Switzerland) Ltd
(VRS) (Zurich, Switzerland). The outlook for each of these ratings
is stable. A.M. Best also has affirmed the ICR of “bbb” and issue
ratings of Validus, the ultimate parent company. The outlook has
been revised to positive from stable for each of these ratings. All
companies are domiciled in Keene, NH, unless otherwise noted. (See
below for a detailed listing of the issue ratings.)
Western World Insurance Company, Stratford Insurance Company and
Tudor Insurance Company have been extended the ratings of Validus
Re in recognition of its strategic importance to the group, the
explicit support provided through a material quota share agreement
with Validus Re, as well as the implied support of future parental
commitment. Validus completed its acquisition of these companies in
late 2014.
The ratings of Validus Re reflect its strong risk-adjusted
capitalization, solid operating performance since inception,
experienced management team and excellent enterprise risk
management program. The company's consistently positive operating
results demonstrate the capability of producing results that are at
the high end of its peer group. Validus Re has the expertise and
capacity to write diverse books of business globally and is
well-positioned to successfully manage through the competitive
market environment. Additionally, the acquisition of Western World
Insurance Company is expected to further enhance Validus’
capabilities in these areas. Further supporting the ratings is that
Validus can provide financial flexibility as a publicly traded
company on the New York Stock Exchange.
Partially offsetting these strengths are the company's exposure
to high severity events as a property catastrophe-focused reinsurer
and the increased competition from capital markets in this space.
However, the company's risk-adjusted capital remains at levels that
have been stress tested to absorb significant catastrophe losses
mitigating this concern. Additionally, Validus Re has enhanced the
business profile of the group by diversifying the company's
revenues to include other lines of business (most recently into the
excess and surplus market), spreading risk exposures geographically
and expanding its distribution channels, which has increased its
client base and scale.
The positive outlooks reflect A.M. Best's expectation that the
group will continue to produce consistent long-term operating
results in relation to its peers and maintain excellent
risk-adjusted capitalization.
Rating factors that could lead to a rating upgrade would be the
continuation of long term, consistently strong operating
profitability relative to its peer group and maintaining strong
risk-adjusted capital levels. Rating factors that could lead to a
change in outlook or a rating downgrade include outsized
underwriting losses relative to its peer group, resulting in a
significant decline in risk-adjusted capital that would not be
supportive of the current rating levels.
The following issue ratings have been affirmed, with the outlook
being revised to positive from stable:
Validus Holdings, Ltd.—-- "bbb" on $250 million 8.875%
senior unsecured notes, due January 2040
The following indicative ratings for securities available under
the shelf registration have been affirmed, with the outlook being
revised to positive from stable:
Validus Holdings, Ltd.—-- "bbb" on senior unsecured
debt-- "bbb-" on subordinated debt-- "bb+" on preferred stock
This press release relates to rating(s) that have been
published on A.M. Best’s website. For all rating information
relating to the release and pertinent disclosures, including
details of the office responsible for issuing each of the
individual ratings referenced in this release, please see A.M.
Best’s Recent Rating Activity web page.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2016 by A.M. Best Rating
Services, Inc. ALL RIGHTS RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20160401005852/en/
A.M. BestSusan Molineux, +1-908-439-2200, ext. 5829Senior
Financial Analystsusan.molineux@ambest.comorSteven
Chirico, +1-908-439-2200, ext. 5087Assistant Vice
Presidentsteven.chirico@ambest.comorChristopher
Sharkey, +1-908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy,
+1-908-439-2200, ext. 5644Assistant Vice President, Public
Relationsjames.peavy@ambest.com
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