A.M. Best Affirms Transmonde Ratings

March 27, 2012

A.M. Best Co. today [Mar. 27] affirmed the financial strength rating of ‘A-’ [Excellent] and issuer credit rating of “a-” of Bermuda-based Transmonde Services Insurance Company, Limited, both with stable outlooks.

Best analysts said the ratings of Transmonde “reflect its minimal underwriting leverage, strong level of capitalization and profitable operating results driven by its excellent underwriting performance.”

As partial offsetting factors Best cited Transmonde’s “relatively high retentions and concentration in liability lines with significant loss severity potential and its limited market profile as a single parent captive.”

Transmonde provides professional, general and pollution liability coverages to members of the International Association of Superintendents, which is a subsidiary of SGS SA, a publicly traded Swiss company.

Best also noted that “Transmonde has maintained very conservative underwriting leverage ratios as surplus has consistently grown to support its business volumes. The company has posted low loss and loss adjustment expense ratios, reflecting SGS SA’s effective risk management.

Transmonde’s relatively high per occurrence retentions are mitigated by significant deductibles and conservative reserving practices.

The ratings recognise the company’s balance sheet strength and conservative underwriting leverage measures as well as Transmonde’s role as the captive insurance company of SGS SA.

Rating factors that could lead to Transmonde’s ratings being upgraded would be the continuation of long-term, consistently strong operating profitability and the maintaining of excellent risk-adjusted capital levels.

The rating factors that could lead to a negative outlook or rating downgrades include unfavorable operating profitability trends, outsized investment losses and a significant decline in the company’s risk-adjusted capital that would not be supportive of its current rating level.”

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