A.M. Best: Platinum’s “Solid” Performance

April 27, 2013

A.M. Best Co. this week affirmed the financial strength rating of A [Excellent] and issuer credit ratings [ICR] of “a” of Platinum Underwriters Bermuda, Ltd. and its strategic affiliate, Platinum Underwriters Reinsurance, Inc. of Baltimore.

A.M. Best also has affirmed the ICR of “bbb” and debt ratings of Bermuda’s Platinum Underwriters Holdings, Ltd.  as well as the debt ratings of Deleware’s Platinum Underwriters Finance, Inc. The outlook for all ratings is stable.

The ratings reflect the group’s “excellent risk-adjusted capitalisation, stable management team, focused business strategy, which strictly emphasizes cycle management, and overall enterprise risk management capabilities. The ratings also consider the organisation’s market profile and low financial leverage.”

A statement from A.M. Best said, “In the fourth quarter of 2012, Platinum easily absorbed losses from Superstorm Sandy, which struck the northeastern part of the United States. This comes on the back of 2011, when Platinum experienced significant catastrophe losses, which resulted in a sizeable net operating loss but only a modest reduction in capital.

“In the quarters that have followed 2011, Platinum continues to execute its resolute cycle management strategy on its simple, yet efficient, operating platform while generating strong historical long-term returns and maintaining excellent risk-adjusted capitalisation.

“Somewhat offsetting these strengths are A.M. Best’s concerns that Platinum’s steadfast cycle management strategy may someday impede its ability to take optimum advantage of future market opportunities as they arise. While it may still be too early to fully evaluate the impact of such a strategy across the entire business cycle, A.M. Best will continue to monitor the organisation’s business profile and market position with regard to significant rating considerations.”

“Factors that could lead to a downgrading of Platinum’s ratings or a revision of its outlook to negative include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to expectations and peers, significant adverse loss reserve development and/or a material decline in risk-adjusted capital. Alternatively, factors that could lead to an upgrading of the company’s ratings include sustained, long-term favorable operating profitability, coupled with maintenance of strong risk-adjusted capital levels.”

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