Ratings Roundup: Novae, PartnerRe S.A., Steamship Mutual

Standard & Poor’s Ratings Services has revised its outlook on U.K.-based Novae – Syndicate 2007 to positive from stable. S&P also affirmed its Lloyd’s Syndicate Assessment (LSA) of ‘2+’ (high dependency) on the syndicate. The revision reflects S& P’s “expectation that the legacy issues relating to certain lines of liability business, written in the late 1990s and since discontinued, will achieve further material resolution during 2008,” explained credit analyst Matthew Day. This resolution could either be via the continued run-off and commutation strategy employed, or through an agreement with a third party to dispose of the affected business. S&P also indicated that its “assessment on Novae – Syndicate 2007 reflects the continued drag from the run-off of the liability business written between 1997 and 2001. The impact from the legacy issues is mitigated, however, by the syndicate’s strong underlying operating performance, improved capitalization, and very good competitive position, including the insurer financial strength rating on Lloyd’s (A+/Stable).”

A.M. Best Co. has withdrawn the financial strength rating of ‘A+’ (Superior) and the issuer credit rating of “aa-” of PartnerRe S.A.(France) following the transfer of its underwriting portfolio to Partner Reinsurance Europe Limited (Ireland) effective January 1, 2008. Consequently, PartnerRe S.A. has been assigned a category NR-5 (Not Formally Followed).

A.M. Best Co. has affirmed the financial strength rating of ‘B++’ (Good) and the issuer credit rating of “bbb+” of UK-based The Steamship Mutual Underwriting Association Limited (Steamship London) with a stable outlook. Best said the “ratings of Steamship London reflect the financial strength of The Steamship Mutual Underwriting Association (Bermuda) Limited (Steamship Bermuda), which provides the Club with explicit support in the form of annually renewable reinsurance. This covers 90 percent of the first $30 million of Steamship London’s net liabilities for any policy year and 100 percent of liabilities in excess of $30 million” (See following).

A.M. Best Co. has affirmed the financial strength rating of ‘B++’ (Good) and issuer credit rating of “bbb+” of The Steamship Mutual Underwriting Association (Bermuda) Limitedwith stable outlooks on both. Best said the ratings reflect its “expectation that the Club will maintain good risk-adjusted capitalization at year-end February 2008, although prospectively it remains exposed to potential earnings volatility from both underwriting and investment results.” Best added that, although it ” anticipates some improvement in performance for the year ending February 2008 supported by a significant reserve release, underwriting losses are expected to continue. As a member of the International Group of P&I Clubs, Steamship Bermuda continues to be exposed to instability in technical results caused by a period of historically high claims in the group’s pooling layer. Additionally, the Club’s investment returns are likely to remain volatile due to relatively high exposure to equities and hedge funds (fund of funds portfolio), despite an anticipated reduction in equity exposure to approximately 20 percent of total invested assets at year-end February 2008.