Ratings Roundup: Greenlight Re, Polish Re, Rembrandt, Macau

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating (ICR) of “a-” of Greenlight Reinsurance, Ltd. as well as the ICR of “bbb-” of Greenlight Re’s holding company parent, Greenlight Capital Re, Ltd. (both of Cayman Islands). The outlook for all the ratings is stable. “The ratings of Greenlight Re are based on its excellent risk-adjusted capitalization, experienced management team and the disciplined implementation of its business plan,” said Best. “The ratings also recognize the company’s enhanced balance sheet strength following the successful initial public offering (IPO) on May 30, 2007 of Greenlight Capital Re. These strengths are partially offset by the start-up nature of Greenlight Re, the challenges associated with writing profitable business in a softening market and the leverage resulting from an investment portfolio that is primarily composed of publicly traded equity securities.”

Standard & Poor’s Ratings Services has placed its ‘BBB-‘ long-term counterparty credit and insurer financial strength ratings on Polskie Towarzystwo Reasekuracji S.A. (Polish Re) on CreditWatch with positive implications. S&P explained that the “CreditWatch placement follows Fairfax Financial Holdings Ltd.’s (BB+/Stable/–) announcement of its public offer to acquire all of the outstanding shares of Polish Re.” It also reflects S&P’s expectation that once the acquisition is complete, Polish Re’s ratings could benefit from group support under S&P’s group rating methodology. “We placed the ratings on CreditWatch because if Fairfax acquires full control of Polish Re (i.e., the minority shareholders, if any, do not have blocking shares), the ratings are likely to be upgraded by one notch to ‘BBB’ to reflect one notch of group support,” explained credit analyst Miroslav Petkov. “If Fairfax does not acquire full control of Polish Re, the ratings are likely to be affirmed with a positive outlook. This would reflect the potential for credit for group support to be given should we satisfy ourselves that the remaining shareholders will not prevent Polish Re from fulfilling its expected strategic role in the group,” he added. If the deal falls through S&P said it would review the ratings “with possible negative implications to reflect the increased uncertainty of its ownership following the failed IPO earlier this year and the unsuccessful acquisition.”

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and the issuer credit rating of “a” of Bermuda-based Rembrandt Insurance Company, a captive operation of Vitol Holding B.V. (Rotterdam), a global oil trading company, with a stable outlook. “The ratings reflect Rembrandt’s strong risk-adjusted capitalization and robust financial performance,” Best noted. “An offsetting factor remains high concentration in one line of business (marine).” In addition Beset said it “believes Rembrandt’s risk-adjusted capitalization is to stay at a strong level, with an improving position in 2008 and 2009, and will be supportive of the current ratings. The company’s capital position is supported by stable actual and prospective growth in gross premiums written. It is also supported by a sufficient reinsurance program placed with secure-rated companies.”

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and the issuer credit ratings of “a” of Macau Insurance Company Limited (MIC) and its subsidiary, Macau Life Insurance Company Limited (MLIC). The outlook for both ratings is stable. Best said: “The ratings reflect MIC’s sustainable market leadership, improved overall operating profitability and strong distribution platform. The ratings also recognize the company’s solid risk-adjusted capitalization and operational synergies derived from its parent, Dah Sing Financial Holdings Limited.” The rating agency also noted that “MIC has been the market leader in the local industry, capturing 35.8 percent of the gross premium written for 2007. The company disseminates its products through local and international brokers/agents and direct sales channels. MIC’s life subsidiary, MLIC, accesses the mass market through the banking branches of its affiliate, Banco Comercial de Macau. The multiple distribution approach is expected to enable MIC to sustain its business growth going forward.”