A.M. Best affirms Endurance ratings
Ratings agency A.M. Best has affirmed the financial strength ratings of Endurance Specialty Holdings Ltd., saying its excellent capitalisation and diversified book of business offset concerns about softening rates in the property and casualty insurance sector.
Best Co. affirmed the FSR of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of Endurance Specialty Insurance Ltd. and its operating affiliates. Concurrently, A.M. Best has affirmed the ICR of “bbb-” of Endurance Specialty Holdings, Ltd. and all related debt ratings. The outlook for all ratings has been revised to positive from stable, Best said.
“These rating actions reflect Endurance’s excellent capitalization, strong broker distribution network and significant risk management enhancements made over the past year. The company maintains a geographically diversified book of business, which includes both short- and long-tail lines of business,” the agency said.
“Endurance’s positive outlook is based on several factors including the enhanced underwriting and risk management controls implemented following the 2005 catastrophe season. These controls enable the company to better analyse all property submissions for the effect on operating returns and zonal aggregations. Endurance has also bolstered its reinsurance program by purchasing additional coverage through both traditional and industry loss warranty markets.”
Best also praised Endurance’s establishment of catastrophe bond coverage through the formation of Shackleton Re Limited. This three tranche catastrophe bond provides protection from both first and second event US earthquake and hurricane exposures, it said.
“These strengths are partially offset by increased competition, which is expected to flatten property rates and place additional pressure on casualty lines as companies seek to diversify their business profiles,” Best added. “This concern is somewhat mitigated by Endurance’s strategy of selective acquisitions with the latest being the establishment of admitted and non-admitted primary US affiliates.”
