Ratings Recap: Labuan, Ansvar, MERITZ, Fairfax, Northbridge

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and the issuer credit rating of “a-” of Malaysia’s Labuan Reinsurance Ltd. with a stable outlook. “The ratings reflect Labuan Re’s stable underwriting performance, conservative investment portfolio and well balanced portfolio with diversified geographic risk,” said Best.

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A-‘ (Excellent) and the ICR of “a-” of New Zealand’s Ansvar Insurance Limited with a stable outlook. “The ratings reflect Ansvar’s consistent underwriting profitability, strong risk-adjusted capitalization and conservative investment strategy,” Best explained. They also take into account the fact that Ansvar is a strategically important subsidiary of its ultimate parent, the UK-based Ecclesiastical Insurance Office plc, and that it benefits from its niche position in the church and community group markets.

A.M. Best Co. has upgraded the financial strength rating to ‘A- (Excellent) from B++ (Good) and the issuer credit rating to “a-” from “bbb+” of South Korea’s MERITZ Fire & Marine Insurance Company, Ltd. Best ahs removed the ratings from under review with positive implications and assigned a stable outlook. “The ratings reflect Meritz’s excellent capitalization, stable operating results, strong growth in long- term business and improvement in operating performance in the first half of fiscal year 2007,” Best noted.

Standard & Poor’s Ratings Services has revised its outlook on Fairfax Financial Holdings Ltd. (FFH), FFH’s operating insurance companies (collectively, Fairfax), and Crum & Forster Holdings Corp. to stable from negative. S&P also affirmed its ‘BB’ counterparty credit ratings on FFH and Crum & Forster and its ‘BBB’ counterparty credit and financial strength ratings on Fairfax. “The stable outlook is based on the view that FFH’s earnings in 2007 and 2008 will remain consistent with the rating, and may improve prospectively,” explained S&P credit analyst Damien Magarelli. “The stable outlook is further supported by a good competitive position.” S&P also indicated that it “expects FFH to improve within the areas of governance, accounting control, and ERM.”

Standard & Poor’s Ratings Services has raised its counterparty credit and financial strength ratings on Northbridge Financial Corp.’s operating companies–Commonwealth Insurance Co., Federated Insurance Co. of Canada, Lombard General Insurance Co. of Canada, and Markel Insurance Co of Canada (collectively Northbridge)–to ‘BBB+’ from ‘BBB’ and removed them from CreditWatch with positive implications, where they were placed on Oct. 18, 2007. The ratings’ outlook is now stable. “We raised the ratings because we consider Northbridge’s stand-alone competitive position, operating performance, reserve adequacy, and enterprise risk management to be better than those of Fairfax Financial Holdings Ltd.’s (FFH; BB/Stable/–) wholly owned entities on a consolidated basis, including runoff,” explained S&P credit analyst Damien Magarelli.

Standard & Poor’s Rating Services has raised the insurer financial strength rating and the counterparty credit rating on Asia Insurance Co. Ltd.to ‘A’ from ‘A-‘ and assigned a stable outlook. “The upgrades reflect Asia Insurance’s extremely strong capitalization, which will support the company’s risk profile and provide it with a strong ability to improve its business profile,” explained S&P credit analyst Paul Clarkson. “The ratings also reflect Asia Insurance’s strong market position, satisfactory operating performance, and high liquidity. These factors are partly offset by the company’s slightly higher-than-average exposure to long-tail risk and equity investments.”