A.M. Best Downgrades Ratings of Majestic Capital, Ltd. and Its Subsidiaries
April 27 2011 - 10:26AM
Business Wire
A.M. Best Co. has downgraded the financial strength
rating (FSR) to E (Under Regulatory Supervision) from B (Fair) and
issuer credit rating (ICR) to “rs” from “bb+” of Majestic
Insurance Company (Majestic) (San Francisco, CA). The ratings
have been removed from under review with negative implications.
A.M. Best also has downgraded the FSR to C+ (Marginal) from B
(Fair) and ICR to “b-” from “bb+” of Twin Bridges (Bermuda)
Ltd. (Hamilton, Bermuda). Concurrently, A.M. Best has
downgraded the ICRs to “c” from “b” of both companies’ ultimate
parent, Majestic Capital, Ltd (Majestic Capital) (Hamilton,
Bermuda) (NASDAQ: MAJC), as well as Majestic Capital’s intermediate
holding companies, Embarcadero Insurance Holdings, Inc.
(Embarcadero) (San Francisco, CA) and Majestic USA Capital,
Inc. (Majestic USA) (Wilmington, DE). Additionally, A.M. Best
has downgraded the debt ratings to “d” from “ccc+” on the trust
preferred securities of Majestic USA and Embarcadero. All the above
ratings are under review with negative implications, with the
exception of Majestic until further discussions are held with
management or future business plans are finalized. (See below for a
detailed listing of the debt ratings.)
These rating actions follow the announcement that the California
Department of Insurance has issued an order of conservation for
Majestic, effective April 21, 2011.
The following debt ratings have been downgraded.
Majestic USA Holdings, Inc.— -- to “d” from “ccc+” on $35
million 8.65% junior subordinated debt securities, due 2036
Embarcadero Insurance Holdings, Inc.— -- to “d”
from “ccc+” on $8 million LIBOR + 4.2% surplus notes, due 2033
The principal methodology used in determining these ratings is
Best’s Credit Rating Methodology -- Global Life and Non-Life
Insurance Edition, which provides a
comprehensive explanation of A.M. Best’s rating process and
highlights the different rating criteria employed. Additional key
criteria utilized include: “Risk Management and the Rating Process
for Insurance Companies”; “Understanding BCAR for Property/Casualty
Insurers”; “Rating Members of Insurance Groups”; and “A.M. Best’s
Ratings & the Treatment of Debt.” Methodologies can be found at
www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and
most authoritative insurance rating and information source. For
more information, visit www.ambest.com.
Copyright © 2011 by A.M. Best Company,
Inc. ALL RIGHTS RESERVED.
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