Best’s News & Research Service - October 03, 2014 02:32 PM (EDT)
A.M. Best Downgrades Issuer Credit Rating of Sorford Surety Insurance Co. Ltd.
Oldwick //BestWire// - A.M. Best has downgraded the issuer credit rating to "bb" from "bb+" and affirmed the financial strength rating of B (Fair) of Sorford Surety Insurance Co. Ltd. (Sorford) (Hamilton, Bermuda). The outlook for both ratings has been revised to negative from stable. The company is a subsidiary of IBT Group, LLC (IBT) (Miami, FL), which is a subsidiary of Eurofinsa S.A. (Eurofinsa) (Madrid, Spain). Eurofinsa and IBT are members of a multinational group of companies that specialize in the development, design, construction, equipment and finance of public infrastructure projects around the world.
Sorford's risk-adjusted capitalization is relatively adequate for its rating level; however, the ICR downgrade reflects concerns associated with the company's lack of sustainable business volume since its inception in 2010 and the related deterioration of capital and surplus due to administrative expenses.
A.M. Best is also concerned with Sorford's ability to meet the assumptions included in its business plan, along with the impact of economic volatility and the possibility that Sorford could be exposed to a confluence of events that will test its capital strength. A.M. Best will monitor the quarterly performance of Sorford against its stated operating plan. Any material adverse deviations with regard to management, earnings, capitalization or risk profile could potentially undermine the stability of the assigned ratings.
Key triggers that could result in positive rating actions would be Sorford generating consistent net income, limiting its losses, meeting or exceeding its business plan and steadily improving its credit metrics to support the ratings over the long term.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best's Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive., please visit www.ambest.com/captive.
The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
- Alternative Risk Transfer (ART)
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- Evaluating Non-Insurance Ultimate Parents
- Evaluating Country Risk
- Rating Surety Companies
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- Understanding BCAR for Property/Casualty Insurers
- Understanding Universal BCAR - A.M. Best's Capital Adequacy Ratio for Insurers
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