|
|
This press release is sponsored by Fifth Third Bank.
Follow this link to learnmore about Fifth Third Bank's financial services to the captive industry.
|
A.M. Best Upgrades Ratings of Real State Insurance
LLC; Revises Outlook to CONTACTS:
FOR IMMEDIATE RELEASE OLDWICK, N.J., May 20, 2009—A.M. Best Co. has upgraded the financial strength rating to B++ (Good) from B+ (Good) and issuer credit rating to “bbb+” from “bbb-” of Real State Insurance LLC (Real State) (Honolulu, HI). The outlook for both ratings has been revised to stable from negative. The ratings reflect Real State’s good capitalization level and favorable operating experience as well as its role as the captive insurance company for EOP Operating Limited Partnership (EOPOLP). Real State also insures Blackstone affiliates, CarrAmerica Realty Operating Partnership, L.P., TRZ Holdings LLC and Blackstone real estate advisor’s office portfolio. Also, the property insurance retention was lowered from $75 million to $50 million. Partially offsetting these positive rating factors is Real State’s compromised risk-adjusted capital strength in the event of a full limit earthquake as measured by Best’s Capital Adequacy Ratio (BCAR) and that the company’s only source of business is the office property portfolio of EOPOLP. Furthermore, earthquake, wind, and terrorism (somewhat mitigated by coverage under TRIA) exposure presents the potential for a single catastrophic loss for Real State that could effectively exhaust more than 90% of its surplus. While the BCAR was higher prior to the leveraged buy-out of Equity Office Partnership Trust (EOPT) by Blackstone, risk-adjusted capital strength decreased due to a change in A.M. Best’s treatment of the parental indemnity agreement. Starting in 2006, the parental indemnity agreement was not recognized for Generally Accepted Accounting Principles (GAAP) by Real State’s auditors, and the parental indemnity agreement no longer receives credit in BCAR from A.M. Best. It should be noted that management has indicated that Hawaii still recognizes the parental indemnity agreement as being valid. Also of note is the changed exposure base of Real State as properties are sold out of the portfolio and others enter the portfolio from property acquisitions. A.M. Best remains the leading rating agency of captive insurers rating a wide variety of more than 200 captives in the United States and throughout the world. For current Best’s Ratings and independent data on the captive and alternative insurance market, please visit www.ambest.com/captive. The principal methodologies used in determining these ratings, including any additional methodologies and factors, which may have been considered, can be found at www.ambest.com/ratings/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. For more information, visit www.ambest.com. ### |
|