NOVEMBER 21, 2018 11:47 AM (EST)
A.M. Best Downgrades Credit Ratings of Citadel Reinsurance Company Ltd.; Withdraws Ratings of Great Falls Insurance Company
FOR IMMEDIATE RELEASE
OLDWICK - NOVEMBER 21, 2018 11:47 AM (EST)
The ratings of Citadel Re reflect its balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, neutral business profile and appropriate enterprise risk management (ERM). The ratings of AMIC reflect its balance sheet strength, which A.M. Best categorizes as weak, as well as its adequate operating performance, limited business profile and appropriate ERM. The ratings of Great Falls reflect its balance sheet strength, which A.M. Best categorizes as strong, as well as its marginal operating performance, limited business profile and appropriate ERM.
The downgrade of Citadel Re reflects a declining trend in risk-adjusted capitalization coupled with continuing marginal operating performance as adverse loss and loss adjusted expense reserve development has prevented a material accumulation of surplus over the most-recent five-year period. However, A.M. Best notes that company projections indicate reserve stabilization for the six-month period ended June 30, 2018, and into near-term periods. This potentially could become a positive rating factor should the reserve stabilization be accompanied by growth in risk-adjusted capitalization. A.M. Best also notes that the company recorded a net profit in 2017.
Negative rating action could occur if operating performance at Citadel Re declines further or demonstrates volatility that negatively impacts earnings and risk-adjusted capitalization. A material shift in the risk profile of Citadel Re or AMIC that potentially could undermine the stability and profitability of each company also could lead to negative rating action.
Positive rating action could occur if reserve development remains stabilized and operating performance at Citadel Re returns to historical levels and risk-adjusted capitalization increases to projected levels over the near term. AMIC’s ratings could be impacted positively if the company’s operating performance or risk-adjusted capitalization improves.
This press release relates to Credit Ratings that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.
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