CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 16, 2010 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Ariel Reinsurance Company Ltd. (Ariel Re), Valiant Insurance Company (Valiant) and Valiant Specialty Insurance Company (Valiant Specialty) (both domiciled in Wilmington, DE). Concurrently, A.M. Best has affirmed the ICR of "bbb-" of Ariel Holdings, Ltd. (Ariel). The outlook for the ratings of Ariel Re and Ariel is stable, while the outlook for the ratings of Valiant and Valiant Specialty has been revised to negative from stable. All companies are domiciled in Hamilton, Bermuda, unless otherwise specified.
The ratings of Ariel and Ariel Re reflect the supportive level of risk-adjusted capitalization and operating performance since their inception, as well as the continued development of Ariel's business profile. The ratings also recognize the benefits derived from the diversification of the group's operating platforms and the extensive experience of the management team. Since formation, Ariel Re has demonstrated a disciplined technical underwriting approach resulting in loss and combined ratios that were favorable and in line with its peer group.
These strengths are partially offset by both companies' limited operating history and the increased volatility inherent in relatively immature companies. Further offsetting these positive rating factors is Ariel and Ariel Re's exposure to high severity, low frequency events as property catastrophe writers potentially exposing underwriting results to wide variations from year to year.
The outlook on the ratings for Ariel and Ariel Re reflects A.M. Best's expectation that underwriting results should benefit from an adequate, albeit lower, rate environment in Ariel's largest line of business, property catastrophe reinsurance, producing operating results and risk-adjusted capital levels that are expected to remain supportive of the current ratings.
The ratings of Valiant and Valiant Specialty (collectively Valiant Group) are based on the supportive level of risk-adjusted capitalization and benefits they derive through Ariel and Ariel Re, including reinsurance protection and risk management support. These strengths are partially offset by Valiant Group's limited operating history, given the increased volatility inherent in start-up companies. Further offsetting factors include the continuation of the challenging rate environment and competitive market conditions that have impacted premium volume written since Valiant Group's inception, resulting in performance metrics that fell below expectations.
The outlook reflects the continued softening underwriting conditions in Valiant Group's targeted lines of business, which could potentially continue to produce results below expectations.
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.