A.M. Best Affirms Credit Ratings of Validus Reinsurance, Ltd.; Revises Issuer Credit Rating Outlook to Positive for Validus R...
April 04 2017 - 2:55PM
Business Wire
A.M. Best has affirmed the Financial Strength Rating
(FSR) of A (Excellent) and the Long-Term Issuer Credit Rating
(Long-Term ICR) of “a” of Validus Reinsurance, Ltd. (Validus
Re) (Hamilton, Bermuda). Concurrently, A.M. Best has affirmed the
FSRs of A (Excellent) and the Long-Term ICRs of “a” of the
following Validus subsidiaries: Western World Insurance
Company, Stratford Insurance Company and Tudor
Insurance Company (all companies headquartered in Parsippany,
NJ). The outlook of the FSRs remains stable, while the outlook of
the Long-Term ICRs remains positive. Additionally, A.M. Best has
revised the Long-Term ICR outlook to positive from stable and
affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” of
Validus Reinsurance (Switzerland) Ltd. (VRS) (Zurich,
Switzerland), a subsidiary of Validus Holdings, Ltd.
(Validus) (Hamilton, Bermuda) [NYSE:VR]. The outlook of the FSR is
stable.
A.M. Best also has affirmed the Long-Term ICR of “bbb” and the
Long-Term Issue Credit Ratings (Long-Term IR) of Validus, the
ultimate parent company. The outlook of these Credit Ratings
(ratings) remains positive. (See below for a detailed listing of
the Long-Term IRs.)
Western World Insurance Company, Stratford Insurance Company and
Tudor Insurance Company have been extended the ratings of Validus
Re in recognition of their strategic importance to the group, the
explicit support provided through a material quota share agreement
with Validus Re and the implied support of future parental
commitment. VRS has been extended the ratings of Validus Re in
recognition of its strategic importance, as the platform by which
Validus Re has expanded and enhanced its business profile in recent
years, as well as the implied support of future parental
commitment.
The ratings of Validus Re reflect its strong risk-adjusted
capitalization, solid operating performance since inception,
experienced management team and excellent enterprise risk
management program. The company’s consistently positive operating
results demonstrate the capability of producing results that are at
the high end of its peer group. Validus Re has the expertise and
capacity to write diverse books of business globally and is
well-positioned to successfully manage through the competitive
market environment. Further supporting the ratings is that the
ultimate parent, Validus, can provide financial flexibility as a
publicly traded company on the New York Stock Exchange.
Partially offsetting these strengths are Validus Re’s exposure
to high-severity events as a property catastrophe-focused reinsurer
and the increased competition from capital markets in this space.
However, the company’s risk-adjusted capital remains at levels that
have been stress tested to absorb significant catastrophe losses
mitigating this concern. Additionally, Validus Re has enhanced the
business profile of the group by diversifying the company’s
revenues to include other lines of business – most recently into
the excess and surplus market through Western World Insurance
Company – spreading risk exposures geographically and expanding its
distribution channels. These actions have increased Validus Re’s
client base and scale. Further diversification will be achieved
following the announcement of the company’s intended purchase of
Crop Risk Services, expected to close in the second quarter of
2017.
The positive Long-Term ICR outlook reflects A.M. Best’s
expectation that the group will continue to produce consistent
long-term operating results in relation to its peers and maintain
excellent risk-adjusted capitalization.
Factors that could lead to a rating upgrade would be the
continuation of long-term, consistently strong operating
profitability relative to its peer group and maintaining strong
risk-adjusted capital levels.
Factors that could lead to an outlook revision or a rating
downgrade include outsized underwriting losses relative to its peer
group, resulting in a significant decline in risk-adjusted capital
that would not be supportive of the current rating levels.
The following Long-Term IR has been affirmed with a positive
outlook:
Validus Holdings, Ltd.—
-- “bbb” on $250 million 8.875% senior unsecured notes,
due January 2040
The following indicative Long-Term IRs for securities available
under the shelf registration have been affirmed with positive
outlooks:
Validus Holdings, Ltd.—
-- “bbb” on senior unsecured debt
-- “bbb-” on subordinated debt
-- “bb+” on preferred stock
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.
A.M. Best is the world’s oldest and most authoritative
insurance rating and information source. For more information,
visit www.ambest.com.
Copyright © 2017 by A.M. Best Rating
Services, Inc. and/or its subsidiaries. ALL RIGHTS
RESERVED.
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version on businesswire.com: http://www.businesswire.com/news/home/20170404006333/en/
A.M. BestSusan Molineux, +1 908-439-2200, ext.
5829Senior Financial
Analystsusan.molineux@ambest.comorSteven Chirico, +1
908-439-2200, ext.
5087Directorsteven.chirico@ambest.comorChristopher
Sharkey, +1 908-439-2200, ext. 5159Manager, Public
Relationschristopher.sharkey@ambest.comorJim Peavy, +1
908-439-2200, ext. 5644Director, Public
Relationsjames.peavy@ambest.com
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