DECEMBER 27, 2011 12:00 AM (EST)
A.M. Best Withdraws Ratings of Clarendon National Insurance Company and its Subsidiaries
David Blades, CPCU
Senior Financial Analyst
(908) 439-2200, ext. 5422
Assistant Vice President
(908) 439-2200, ext. 5630
Senior Manager, Public Relations
(908) 439-2200, ext. 5378
Assistant Vice President, Public Relations
(908) 439-2200, ext. 5644
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - DECEMBER 27, 2011 12:00 AM (EST)
A.M. Best Co. has downgraded the financial strength rating to B+ (Good) from A- (Excellent) and issuer credit ratings to "bbb-" from "a-" of Clarendon National Insurance Company and its subsidiaries (together referred to as Clarendon) (Princeton Junction, NJ). (See below for a detailed listing of the companies.) All ratings have been removed from under review with negative implications and assigned a negative outlook. Concurrently, A.M Best has withdrawn the ratings due to the decision of Enstar Group Limited (Enstar), Clarendon's ultimate parent, not to participate in A.M. Best's interactive rating process.
The rating action follows the completion of the sale of all the operating companies of Clarendon Insurance Group, Inc. to Enstar. Enstar specializes in the acquisition and management of insurance and reinsurance companies that are in run-off, including the management of their run-off portfolios. Clarendon's operations have been focused on running off its remaining liabilities since December 2005.
In addition to the change in ownership, the rating action also takes into consideration the adverse financial effects from the commutation of Clarendon's loss portfolio transfer agreement with the former ultimate parent, Hannover Rueckversicherung AG (Hannover Re). This is somewhat mitigated by the maintenance of the protection afforded by the adverse development cover that is still in place between Hannover Re and Clarendon's member companies. In addition, greater uncertainty exists regarding Clarendon's future cash flow and capital position under new ownership. Lastly, Clarendon's risk-adjusted capitalization is negatively impacted by the fact that a significant portion of Clarendon's assets are being used to collateralize the bank loan facility Enstar used, in part, to finance the purchase of Clarendon.
The FSR of B+ (Good) and ICRs of "bbb-" have been withdrawn for Clarendon Insurance Group and its following members: