Ratings Recap: PhilNaRe, Atlas IV Cat Bond, HSBC (Bermuda), Cunningham Lindsey

A.M. Best Co. has assigned a financial strength rating of ‘B++’ (Good) and an issuer credit rating of “bbb” to National Reinsurance Corporation of the Philippines (PhilNaRe) with a stable outlook. “The ratings reflect the company’s adequate risk-adjusted capitalization, established market presence in the Philippines, stable combined ratio and conservative investment portfolio,” said Best. “The ratings also recognize the Capital Enhancement Program (CEP) that the company has implemented since 2003.”

Standard & Poor’s Ratings Services has assigned its ‘B’ credit ratings to the €160 million ($236.4 million) Principal at Risk Variable Rate Notes due Jan. 10, 2011, issued by Atlas Reinsurance IV Ltd. (Atlas Re IV). “Catastrophe (CAT) bonds of this type are well-established risk management tools for insurance and reinsurance companies to transfer peak risks in certain parts of the world into the capital markets,” explained S&P credit analyst Cameron Heath. S&P also noted that Atlas Re IV is a special-purpose company, incorporated in Ireland. “The issuer swaps the total return of the asset portfolio with Goldman Sachs International,” in exchange for quarterly payments. Simultaneous to the issuance of the notes, Atlas Re IV entered into a retrocessional contract with SCOR Global P&C SE (SCOR; insurer financial strength rating; A-/Stable). The contract will provide for payments to SCOR if a windstorm of a certain magnitude occurs within predefined countries of Europe, or if an earthquake of a certain magnitude occurs within Japan.

Standard & Poor’s Ratings Services said today that it assigned its ‘AA’ counterparty credit and financial strength ratings to Bermuda-based HSBC Insurance (Bermuda) Ltd. (HIBL), the captive insurer of HSBC Holdings PLC (HSBC Holdings; AA-/Stable/A-1+), with a stable outlook. “HIBL is wholly owned by Bermuda (UK) Holdings Ltd., a U.K. subsidiary of the Bank of Bermuda Ltd. (AA-/Stable/A-1+), of which the ultimate parent is HSBC Holdings,” said S&P. “HIBL qualifies for pure captive status under our rating criteria and is considered as core to HSBC Holdings, and as such, it is rated at the same level as HSBC Holdings’ other core subsidiaries,” stated S&P credit analyst Taoufik Gharib.

Standard & Poor’s Ratings Services has affirmed its ‘B-‘ counterparty credit rating on Cunningham Lindsey Group Inc. (LIN), but has maintained a negative outlook on the ratings. “The affirmation follows the announcement that Fairfax Financial Holdings Ltd. and LIN have entered into an agreement with Stone Point Capital LLC,” indicated S&P credit analyst Damien Magarelli. The agreement with Trident IV L.P. and certain affiliated entities, which are private equity funds managed by Stone Point, will change LIN’s ownership structure. Stone Point will gain 51 percent ownership in LIN by investing $80 million in capital, while Fairfax’s ownership will decrease from 85 percent to 45 percent. LIN management is expected to own 4% after contributing $30 million as part of the transaction.