Best Affirms Platinum’s ‘A’ Ratings

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Bermuda-based Platinum Underwriters Group and its members. Best also has affirmed the ICR of “bbb” of Platinum Underwriters Holdings, Ltd., and the debt ratings of Platinum and Platinum Underwriters Finance, Inc. The outlook for all of the ratings is stable.

The ratings reflect the group’s “superior capitalization, consistently strong operating results and well-established business position as a global, multi-line provider of reinsurance coverages,” said Best. “The ratings also reflect the group’s good financial flexibility, very strong liquidity and sound enterprise risk management capabilities.”

As offsetting factors, Best cited “the challenges that have occurred in the global reinsurance market including rate softening and increased competition in recent years, which are impacting the group’s ability to find new profitable business opportunities.” However, Best added that “Platinum’s adherence to underwriting discipline should help insulate it from the potential for future underwriting losses and position it well to take full advantage of future market opportunities as they arise.”

In addition Best noted that the group has generated “very strong underwriting results over the most recent five-year period with a five-year average combined ratio of 93.5 percent. From an earnings perspective, net investment income continued to contribute to the bottom line due to the group’s growing invested asset base and positive operating cash flow measures.

“Despite challenges related to natural catastrophes and investment market turmoil, Platinum generated a healthy 2009 earnings result with net income of $382 million, driven in part by favorable loss reserve development.

“Earnings through first quarter 2010 remained profitable, despite a negative underwriting impact from global natural catastrophes. The group monitors its exposures to catastrophe losses through several modeling techniques and limits the amount of capital exposed based on the modeling of a 1 in 250 year per occurrence event.”

In conclusion Best pointed out that “Platinum maintains conservative financial leverage measures as total debt-to-total capital was approximately 11 percent at year-end 2009 with strong interest coverage measures. Additionally, Platinum’s asset allocation is conservative, with the vast majority held in highly rated fixed income holdings with diversification by industry sector and issuer.”

Best summarized the entities affected by the rating action as follows:
The FSR of ‘A’ (Excellent) and ICRs of “a” have been affirmed for Platinum Underwriters Group and its following members:
— Platinum Underwriters Reinsurance, Inc.
— Platinum Underwriters Bermuda, Ltd.

The following debt ratings have been affirmed:
Platinum Underwriters Finance, Inc.—
— “bbb” on $250 million 7.50 percent senior unsecured notes, due 2017

The following indicative ratings available under the shelf registration have been affirmed:
Platinum Underwriters Holdings, Ltd.—
— “bbb” on senior unsecured debt
— “bbb-” on subordinated debt
— “bb+” on preferred stock

Source: A.M. Best