|
|
|
A.M. Best Assigns Ratings to Grafton (Europe) Insurance Company Limited CONTACTS:
FOR IMMEDIATE RELEASE OLDWICK, NEW JERSEY, U.S.A., Dec. 18, 2009—A.M. Best Co. has assigned a financial strength rating of A- (Excellent) and issuer credit rating of “a-” to Grafton (Europe) Insurance Company Limited (Grafton) (Malta). The outlook for both ratings is stable. The ratings reflect Grafton’s proposed innovative solutions aimed at improving the capital efficiency of insurance captives. Offsetting factors are the potential lack of financial flexibility in an adverse claims development environment and the implementation risks associated. A.M. Best believes that Grafton’s business model identifies an untapped market opportunity for the niche insurance captive industry (specifically liability risks). Grafton’s proposed solution is expected to provide capital relief to captives and their parent groups through the use of innovative solutions and the release of the captives’ run-off liability insurance portfolios. In A.M. Best’s opinion, Grafton is also likely to take advantage of being the first participant in its market and having the support of internationally recognised third parties. In A.M. Best’s view, the run-off nature of the insurance portfolios to be targeted and the prudent margins expected to be included in the pricing process are likely to reduce the volatility of results. Grafton’s initial capital injection amounts to GBP 50 million (approximately USD 80 million). Grafton also has put into place a 50% quota share agreement and an adverse development cover with a top rated international reinsurer (National Indemnity Company) that supports the company’s risk-adjusted capitalisation minimizing its credit risk. A.M. Best expects Grafton to maintain its capitalisation levels comfortably above the minimum required to support the ratings assigned under a pessimistic scenario. Nevertheless, given the implementation risks associated with start-up companies and the fact that under exceptional adverse claims circumstances, the company’s financial flexibility could be severely restricted, Grafton will be under considerable A.M. Best scrutiny as it strives to meet its business plan. For Best’s Credit Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings. The principal methodologies used in determining these ratings, including any additional methodologies and factors that 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 ### |
|