S&P Takes Rating Actions on Endurance Specialty and Subsidiaries

Standard & Poor’s Ratings Services has assigned its ‘A’ counterparty credit and financial strength ratings to Endurance American Insurance Co. (EAIC), American Merchants Casualty Co. (AMCC), and American Agri-Business Insurance Co. (AABIC).

S&P has also affirmed all of its existing ratings on Bermuda-based Endurance Specialty Holdings Ltd. (currently “BBB+” with a stable outlook) and its core subsidiaries. The outlook is stable.

“The ratings on EAIC, AMCC, AABIC, along with Endurance American Specialty Insurance Co., reflect their core status to the group” S&P noted. These four companies formed a pooling arrangement in 2009, to which they cede 100 percent of their gross premiums written. The pooling of the U.S. insurance entities is intended to better balance premiums with expenses incurred, effectively leverage capital, and efficiently purchase third-party reinsurance.

S&P said it “views this intercompany pool as core to its parent, essentially because of its significance to Endurance. At year-end 2008, the intercompany pool constituted about 40 percent of the group’s consolidated pro forma gross premiums written. In addition, these pooled entities benefit from substantial intercompany, third party, and U.S. government (through federal crop insurance program) reinsurance protection.”

Credit analyst Taoufik Gharib added: “The ratings on Endurance reflect our opinion that the group has established a strong track record since it started its operation in 2001. We view the company’s management team and corporate strategy as positive to the rating.”

Endurance has a strong and seasoned management team with a strategy focused on consistent underwriting profits through market cycles.

The ratings are also based on the group’s strong competitive position, robust operating performance with prudent reserve practices, very strong capitalization, and excellent enterprise risk management.

Offsetting these strengths are the significant growth in a potentially volatile agriculture line of business and material exposure to property catastrophe risk.

Source: Standard & Poor’s – www.standardandpoors.com