A.M. Best Affirms One Beacon Ratings

October 7, 2014

A.M. Best has affirmed the financial strength rating [FSR] of A [Excellent] and the issuer credit ratings [ICR] of “a” of Atlantic Specialty Insurance Company [New York, NY] and its three U.S. reinsured affiliates, collectively referred to as OneBeacon Insurance Group .

A statement from rating company said, “At the same time, A.M. Best has affirmed the ICRs of “bbb” and debt ratings of OneBeacon’s publicly traded parent, OneBeacon Insurance Group, Ltd. [Hamilton, Bermuda] and its intermediate holding company, OneBeacon U.S. Holdings, Inc..

“Concurrently, A.M. Best has affirmed the ICR of “bbb” of the group’s ultimate parent, White Mountains Insurance Group, Ltd. [Hamilton, Bermuda]. The outlook for all the above ratings is stable.

“Additionally, certain indirect subsidiaries of OneBeacon Ltd. [containing the group’s run-off business] were placed under review in October 2012, as a result of their planned sale to Armour Group Holdings Limited. The ratings of these companies remain under review with negative implications pending completion of the sale.

“The affirmation of the group’s ratings reflects the group’s sound level of risk-adjusted capitalization and solid earnings derived from its generally profitable underwriting performance and steady investment earnings.

“The ratings also consider the financial flexibility of OneBeacon U.S. and OneBeacon Ltd.

“These positive rating factors are partially offset by the adverse development of prior years’ loss reserves related to the run-off business, the payment of significant shareholder dividends, which have constrained growth in surplus, and the elevated level of equity investments, which while well-managed, adds volatility to the group’s earnings and balance sheet.

“The affirmation of the ratings of OneBeacon Ltd., OneBeacon U.S. and White Mountains acknowledges the companies’ strong financial flexibility and solid operating results generated through their operating subsidiaries. Financial leverage and interest coverage ratios are within A.M. Best’s guidelines for the ratings.

“While the ratings for OneBeacon are stable, future positive rating actions may result from continued profitable underwriting and operating performance. However, negative rating actions could result if the operating performance falls markedly short of A.M. Best’s expectations or there is a weakening of its overall risk-adjusted capitalization.”

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