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FOR IMMEDIATE RELEASE
OLDWICK - DECEMBER 20, 2017 06:22 PM (EST)
A.M. Best has removed from under review with negative implications and affirmed the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a+” of Allied World Assurance Company, Ltd. (Allied World) and its operating affiliates.
Concurrently, A.M. Best has removed from under review with negative implications and affirmed the Long-Term ICR of “bbb+” of the ultimate parent, Allied World Assurance Company Holdings, GmbH (formerly known as Allied World Assurance Company Holdings, AG) (Switzerland), and its downstream holding company, Allied World Assurance Company Holdings, Ltd (Allied World Holdings Bermuda) (Bermuda). A.M. Best also has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “bbb+” of Allied World Holdings Bermuda. The outlook assigned to all of these Credit Ratings (ratings) is stable.
A.M. Best also has assigned an FSR of A (Excellent) and a Long-Term ICR of “a+” to Vault E&S Insurance Company (Vault) (Little Rock, AR). The outlook assigned to these ratings is stable. Vault is a newly created insurance operation that benefits from its reinsurance agreement with Allied World, as well as common ownership and management and additional implicit support.
Allied World’s ratings reflect its balance sheet strength, which A.M. Best categorizes as strongest, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management (ERM). Allied World’s balance sheet strength is supported by a high quality of invested assets, historically adequate reserve levels and a favorable liquidity position.
Despite relatively large losses reported from hurricanes and wildfires that struck the United States and the Caribbean during the third quarter of 2017, the company’s net underwriting loss did not exceed its catastrophe risk tolerance level. A.M. Best expects Allied World’s underwriting performance to be challenged to remain in line with its historical performance due to competitive pressure on its direct casualty business, its largest business segment, less favorable reserve development recognized over the past few years, and the expectation of more normalized property catastrophe losses. Despite these challenges, Allied World remains well-positioned, with a diversified portfolio of property/casualty insurance and reinsurance lines of business. Additionally, the group maintains a comprehensive ERM framework and has an experienced management team.
Allied World is expected to benefit from its third-quarter 2017 acquisition by Fairfax Financial Holdings Limited (Fairfax) (Toronto, Canada) [TSX: FFH and FFH.U]. Fairfax maintains favorable financial flexibility, large levels of cash and marketable securities, and a track record of supporting its subsidiaries.
The following operating companies of Allied World Assurance Company, Ltd. have been removed from under review with negative implications, and the FSR of A (Excellent) and the Long-Term ICRs of “a+” have been affirmed, with each assigned a stable outlook:
The following Long-Term IRs have been removed from under review with negative implications and affirmed with an assigned outlook of stable for Allied World Assurance Company Holdings, Ltd:
— “bbb+” on $300 million 5.5% senior unsecured notes, due 2020
— “bbb+ on $500 million 4.35% senior unsecured notes, due 2025 (all notes are unconditionally and irrevocably guaranteed by AWH)
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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