A.M. Best Affirms Ratings Of Maiden Holdings

June 1, 2015

Rating company A.M. Best has affirmed the financial strength rating [FSR] of A- [Excellent] and the issuer credit ratings [ICR] of “a-” of the property/casualty subsidiaries of Bermuda-based Maiden Holdings, Ltd. .

Concurrently, A.M. Best has affirmed the ICR of “bbb-” of Maiden Holdings and the debt rating of “bb” on its preferred stock. A.M. Best has also affirmed the ICR and senior debt ratings of “bbb-” of Maiden Holdings North America, Ltd, a direct, wholly owned subsidiary of Maiden Holdings. Maiden NA’s senior notes are fully and unconditionally guaranteed by Maiden Holdings.

A statement from the ratings agency said, “Additionally, A.M. Best has affirmed the FSR of A- [Excellent] and the ICR of “a-” of Maiden Specialty Insurance Company [MSIC] [Raleigh, NC]. The outlook for this rating is stable.

“The ratings reflects Maiden’s consistently profitable underwriting and operating performance within its niche market segments, serving small- to medium-size insurance companies underwriting traditional lines of business. This helps distinguish Maiden from other reinsurers that have a greater proportion of their book of business in higher volatility segments such as catastrophe-exposed property reinsurance. Maiden’s non-catastrophe property/casualty book is a well-diversified, low-volatility portfolio that generates more predictable and profitable performance, and has generated very consistent underwriting and operating returns. In addition, Maiden’s ratings also reflect its solid risk-adjusted capitalization, due in part to capital contributions from Maiden Holdings and the operational benefits that Maiden derives as a quota share partner with AmTrust Financial Services, Inc.’s [AFSI] Bermuda reinsurance subsidiary, AmTrust International Insurance, Ltd. [AII].

“Partially offsetting these positive rating factors is the continuing execution risk faced by Maiden in achieving its business plans due in part to the continuing competitive environment in its core reinsurance markets, as well as its client concentration, as AFSI accounts for approximately 65% of the group’s 2014 total gross premiums.

“Maiden Holdings’ adjusted debt-to-total capital, excluding accumulated other comprehensive income [AOCI] of 25.6%, and adjusted debt-to-total tangible capital [excluding AOCI] of 27.1% at March 31, 2015 were within A.M. Best’s guidelines for the company’s ratings.

“The ratings of MSIC reflect its run-off status following the 100% quota share reinsurance arrangement of Maiden’s excess and surplus unit, including the transfer of MSIC staff and underwriting platform to Brit Insurance.

“Key rating factors that may lead to positive rating actions include the organization producing operating results that exceed its peers for an extended period, along with the strengthening of its risk-adjusted capitalization. Factors that may lead to negative rating actions include a trend of increasingly deteriorating underwriting and operating performance to a level below the group’s peers, or an erosion of surplus that causes a significant decline in risk-adjusted capitalization.”

 

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