CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - APRIL 11, 2011 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength ratings (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of Berkley Insurance Group (Berkley Insurance), Admiral Insurance Group (Admiral), Berkley Regional Group (Berkley Regional) (Greenwich, CT) and Nautilus Insurance Group (Nautilus) (Scottsdale, AZ) and their respective property/casualty members.
A.M. Best also has affirmed the FSR of A+ (Superior) and ICR of "aa-" of Berkley Life and Health Insurance Company (Berkley Life and Health) (Urbandale, IA).
Concurrently, A.M. Best has affirmed the ICR and debt ratings of "a-" on senior unsecured notes and "bbb" on trust preferred securities of the parent company, W. R. Berkley Corporation (W. R. Berkley) (Greenwich, CT) [NYSE: WRB]. The outlook for all ratings is stable. All companies are domiciled in Wilmington, DE, unless otherwise specified. (See link below for a detailed list of the companies and ratings.)
The rating affirmations for Berkley Insurance and Berkley Regional reflect the companies' highly favorable underwriting and operating performance, solid capitalization, strong operating cash flow and considerable business diversification. Below average catastrophe exposure and moderate risk profile were significant rating considerations as well.
A.M. Best believes the excellent performance of Berkley Insurance and Berkley Regional is largely owed to well-established business strategies, which feature individual operating units focused on specific niche markets, primarily defined by geography and product orientation. The demonstrated market expertise that has led to favorable operating results also has helped long-term stability resulting in above average retention. Based on these factors, A.M. Best believes these favorable operating results will continue, as both groups maintain their established market position despite persisting competitive pressures.
Partially offsetting these positive rating factors is the above-average net underwriting leverage at both groups. The consistent generation of profitable operating results has helped overcome this negative issue. Although both groups have had significant favorable development on reserves for recent accident years, they continue to experience adverse loss reserve development in older accident years.
The rating affirmations of Admiral and Nautilus recognize their historically profitable underwriting and operating performance, strong capitalization, excellent operating cash flows and well-established expertise in the surplus lines market.
Partially offsetting these positive risk factors is Admiral and Nautilus' slightly above-average underwriting leverage and adverse development of older accident years' reserves specific to Admiral.
The ratings of all the affiliated property/casualty groups consider the role and strategic importance of each within the W. R. Berkley organization. As such, A.M. Best views these groups as core business units of W. R. Berkley, which are afforded implicit and explicit support by the parent.
The affirmation of Berkley Life and Health's ratings recognizes its continued strong risk-adjusted capital position, which is expected to support its projected business going forward, and the financial and operational support of W. R. Berkley. Berkley Life and Health is strategic to the organization's expansion into the accident and health market, primarily medical stop-loss coverage.
W. R. Berkley's ICR and debt ratings acknowledge A.M. Best's view that its substantial financial flexibility has been evidenced by its ability to access capital markets and maintain investor interest. While W. R.Berkley has historically maintained considerable financial leverage, strong earnings have fueled the improved capital levels of its subsidiaries and led to the company's debt-to-total capital trending lower over the last several years. However, its leverage has remained above that of industry peers.
At December 31, 2010, W. R. Berkley's unadjusted debt-to-capital (including trust preferred securities) stood at 32%, towards the higher end of its stated target range for financial leverage of 25% to 35%. While the competitive property/casualty operating environment is still likely to place some pressure on 2011 underwriting results, W. R. Berkley's earnings are expected to remain solid, and both its cash coverage ratios and its financial leverage, should remain supportive of its ratings. A.M. Best will continue to closely monitor both measures, particularly financial leverage, to ensure that they remain in line with expectations and more importantly continue to support the ratings.
For a complete listing of W. R. Berkley Corporation and its subsidiaries' FSRs, ICRs and debt ratings, please visit W. R. Berkley Corporation.
The principal methodology used in determining these ratings is Best's Credit Rating Methodology - Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best's rating process and highlights the different rating criteria employed. Additional key criteria utilized include: "Risk Management and the Rating Process for Insurance Companies"; "Rating Health Insurance Companies"; "BCAR for Life and Health Insurers"; "Understanding BCAR for Property/Casualty Insurers"; "Assessing Country Risk"; and "Rating Members of Insurance Groups." Methodologies can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.