Best Affirms Harbor Point Re ‘A’ Ratings

A.M. Best Co. has affirmed the financial strength rating (FSR) of “A” (Excellent) and the issuer credit rating (ICR) of “a” of Bermuda-based Harbor Point Re Limited, and has assigned the ICR of “bbb” to Harbor Point Limited. The outlook for all ratings is stable.

“The rating affirmations reflect Harbor Point’s successful first-year execution of operations within the parameters of the business plan presented to A.M. Best during last year’s initial rating process, along with solid risk-based capitalization and strong market acceptance,” said the bulletin.

Harbor Point was formed in 2005 as a spin off of the reinsurance operations of Chubb Re, a subsidiary of The Chubb Corp. (See IJ web site Oct. 26, 2005). As Best’s bulletin notes its original capitalization was $1.3 billion of tangible capital and a $200 million convertible note issued to Chubb in exchange for acquired business. As part of the transaction, Harbor Point received the renewal rights to Chubb Re’s existing reinsurance business, which was comprised primarily of assumed treaty reinsurance for casualty lines. Best assigned the venture an “A” rating (See IJ web site Dec.19, 2005).

“Over the past year, Harbor Point has increased its property catastrophe and other short-tail lines of reinsurance business,” Best noted. “Chubb has retained responsibility for all liabilities related to business underwritten prior to the formation of Harbor Point with claims being managed by Harbor Point pursuant to a claims services agreement.

“Harbor Point successfully retained key senior management personnel from Chubb Re’s operations and the existing infrastructure including back office operations, thereby providing for continuity of operations. Additionally, Harbor Point has the ability to use Federal Insurance Company (100 percent owned by Chubb) paper in the near term until a U.S. platform is created.”

Best did note that “Harbor Point’s strengths are partially offset by increased competition and new capacity brought to market from both established and newly created companies. This additional capacity could dampen expected returns if pricing of reinsurance coverage fails to meet anticipated levels.”

Best said it would “closely monitor the quarterly performance of Harbor Point against its stated business plan, and any material negative deviations in terms of management, earnings, capitalization or risk profile could result in downward pressure on the ratings.”