Press Release - NOVEMBER 21, 2018

A.M. Best Downgrades Credit Ratings of Citadel Reinsurance Company Ltd.; Withdraws Ratings of Great Falls Insurance Company


CONTACTS:
 Susan Molineux
Associate Director
+1 908 439 2200, ext. 5829
susan.molineux@ambest.com

Steven M. Chirico, CPA
Director
+1 908 439 2200, ext. 5087
steven.chirico@ambest.com
Christopher Sharkey
Manager, Public Relations
(908) 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
(908) 439 2200, ext. 5644
james.peavy@ambest.com

FOR IMMEDIATE RELEASE

OLDWICK - NOVEMBER 21, 2018
A.M. Best has downgraded the Financial Strength Rating (FSR) to B++ (Good) from A- (Excellent) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “bbb+” from “a-” of Citadel Reinsurance Company Ltd. (Citadel Re) (Hamilton, Bermuda). The outlook of these Credit Ratings (ratings) has been revised to stable from negative. In addition, A.M. Best has revised the outlooks to stable from negative and affirmed the FSR of B+ (Good) and the Long-Term ICR to “bbb-” of American Millennium Insurance Company (AMIC) (Bridgewater, NJ), Citadel Re’s subsidiary. A.M. Best also has affirmed the FSR of B++ (Good) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “bbb+” of Great Falls Insurance Company (Great Falls) (Auburn, ME), of which Citadel Re is the majority shareholder. The outlook of these ratings is stable. Concurrently, A.M. Best has withdrawn the ratings of Great Falls as the company has requested to no longer participate in A.M. Best’s interactive rating process.

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.

A.M. Best is a global rating agency and information provider with a unique focus on the insurance industry.


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