Rating agency AM Best Co. has affirmed the financial strength rating of A (excellent) and issuer credit ratings of "a" of Bermuda-based reinsurer Platinum Underwriters Group.

The outlook for all ratings is stable.

Best said the ratings reflect the group's superior capitalisation, consistently strong operating results and well-established business position as a global, multi-line provider of reinsurance coverages. The ratings also reflect the group's good financial flexibility, very strong liquidity and sound enterprise risk management capabilities.

In its commentary, the rating agency added that somewhat offsetting these strengths are the challenges that have occurred in the global reinsurance market including rate softening and increased competition in recent years, which are impacting the group's ability to find new profitable business opportunities.

However, Platinum's adherence to underwriting discipline should help insulate it from the potential for future underwriting losses and position it well to take full advantage of future market opportunities as they arise.

The group has generated very strong underwriting results over the most recent five-year period with a five-year average combined ratio of 93.5%.

From an earnings perspective, net investment income continued to contribute to the bottom line due to the group's growing invested asset base and positive operating cash flow measures.

Despite challenges related to natural catastrophes and investment market turmoil, Platinum generated a healthy 2009 earnings result with net income of $382 million, driven in part by favourable loss reserve development.

Earnings through first quarter 2010 remained profitable, despite a negative underwriting impact from global natural catastrophes. The group monitors its exposures to catastrophe losses through several modeling techniques and limits the amount of capital exposed based on the modelling of a one in 250 year per occurrence event.

Platinum maintains conservative financial leverage measures as total debt-to-total capital was approximately 11 percent at year-end 2009 with strong interest coverage measures. Additionally, Platinum's asset allocation is conservative, with the vast majority held in highly rated fixed income holdings with diversification by industry sector and issuer.