A.M. Best Affirms Endurance Speciality Ratings
A.M. Best Co. today [Apr. 10] affirmed the financial strength rating [FSR] of ‘A’ [Excellent] and issuer credit ratings (ICR) of “a” of Endurance Specialty Insurance Ltd. and its affiliates, as well as the ICR of “bbb” and debt ratings of the publicly traded parent, Endurance Specialty Holdings, Ltd. Both companies are domiciled in Bermuda. The outlook for all of the ratings is stable.
The ratings reflect Endurance’s “strong level of risk-adjusted capitalisation, specialty focused, diversified business profile and the company’s relatively solid operating performance given the natural catastrophes in the past few years,” Best explained.
“Approximately 30 percent of Endurance’s net premiums written are related to agriculture insurance,” Best noted, “which gives it a somewhat unique profile when compared to many of its peers. Historically the agriculture business has been profitable for Endurance since it was acquired in 2007.”
However, Best pointed out that in 2012 “there was a severe drought in the United States, which resulted in a loss for this line of business. While the agricultural losses were in line with Endurance’s risk profile and it still reported an overall net profit, the losses dampened operating results in 2012 and came on the back of a net income loss in 2011 as a result of global catastrophes.”
In addition Best noted that “Endurance has built a solid enterprise risk management framework that has evolved with the company and allows the organization to absorb the aforementioned losses. Nonetheless, operating performance can help drive balance sheet strength or erode it, and Endurance will continually be monitored in that aspect as part of Best’s overall analysis.
“Endurance continues to execute its strategy, and in recent months, there have been some management changes that are expected to augment the company’s capabilities. However, there continues to be broad market challenges going forward as casualty rates remain soft, investment yields are low and global economic uncertainty remains part of the landscape.”
In summary Best said “these challenges and other rating factors, which could lead to Endurance’s ratings being downgraded or a revision of the outlook to negative, include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to expectations and peers, adverse loss reserve development and/or a material decline in risk-adjusted capital.
“Alternatively, factors that could lead to a ratings upgrade include sustained favorable operating profitability, coupled with maintenance of strong risk-adjusted capital levels and robust enterprise risk management.
Endurance Specialty Insurance Ltd. provides property and casualty insurance and reinsurance in Bermuda, United Kingdom, and United States.
The company’s insurance products include property, casualty, healthcare liability, workers’ compensation, and professional lines.
Its reinsurance products include property, catastrophe, casualty, agriculture, marine, aerospace, surety, and various specialty lines. The company serves national, regional, and specialty insurance companies.
It markets its products through brokerage distribution channel. The company was founded in 2001 and is based in Pembroke, Bermuda.
Best summarised the company’s affected but its ratings report as follows:
The FSR of ‘A’ (Excellent) and ICRs of “a” have been affirmed for Endurance Specialty Insurance Ltd and its following affiliates:
- Endurance Reinsurance Corporation of America
- Endurance Worldwide Insurance Limited
- Endurance American Specialty Insurance Company
- Endurance American Insurance Company
- Endurance Risk Solutions Assurance Co.
- American Agri-Business Insurance Company
The following debt ratings have been affirmed:
Endurance Specialty Holdings, Ltd.
- “bbb” on $335 million 7.0 percent senior unsecured notes, due 2034
- “bbb” on $200 million 6.15 percent senior unsecured notes, due 2015
- “bb+” on $200 million 7.75 percent Series A non-cumulative preferred shares
- “bb+” on $230 million 7.50 percent Series B non-cumulative preferred shares
The following indicative shelf ratings have been affirmed for debt securities available under the existing shelf registration:
Endurance Specialty Holdings, Ltd.
- “bbb” on senior unsecured debt
- “bbb-”on subordinated debt
- “bb+” on preferred stock
Endurance Holdings Capital Trust I & II [guaranteed by Endurance Specialty Holdings, Ltd]
- “bb+” on preferred Securities
