Ratings: Argo Re, Heddington, La Colonial, Trinidad & Tobago, Lancashire, Brit

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Bermuda-based Argo Re Ltd. and its U.S. subsidiaries. Best also affirmed the ICR of “bbb” of the parent holding company, Argo Group International Holdings, Ltd. The outlook for all ratings is stable. “These ratings reflect Argo Re’s supportive capitalization, experienced management team, and the historical profitability of its U.S. subsidiaries,” said Best. “The specialty U.S. operations, which represent the core business of the Argo Group, are managed holistically as respects to capital, investment strategy and market presence. Argo Re, as the lead insurer, also assumes risk via a quota share reinsurance agreements with its U.S. subsidiaries.” In addition Best noted that the ratings “reflect the favorable results to date of Argo Re’s growing book of unaffiliated, third-party reinsurance business comprised of short-tail coverages, mainly property catastrophe reinsurance. The ratings of the former Argonaut Insurance Group, Colony Insurance Group and Rockwood Casualty Group have been withdrawn. In summary Best said: “The FSR of ‘A’ (Excellent) and ICRs of “a” has been affirmed for Argo Re, Ltd. and its following subsidiaries: Argonaut Great Central Insurance Company- Argonaut Insurance Company- Argonaut Limited Risk Insurance Company-Argonaut Midwest Insurance Company- Argonaut-Southwest Insurance Company-Colony Insurance Company-Colony National Insurance Company- Colony Specialty Insurance Company-Rockwood Casualty Insurance Company-Select Markets Insurance Company-Somerset Casualty Insurance Company.

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating of “a+” of Bermuda-based Heddington Insurance Limited, both with stable outlooks. “The ratings reflect Heddington’s superior capitalization, consistently positive operating results and the role that the company serves as a captive insurance company for Chevron Corporation,” Best explained. “These positive rating factors are partially offset by the company’s high net loss exposures as the coverages provided tend to result in claims that are characterized as low frequency but high severity. This is somewhat mitigated by Heddington’s good loss history supported by very strong investment income and parental support on loans to affiliated companies. Heddington has sufficient resources to meet its underwriting-related obligations, as measured by Best’s Capital Adequacy Ratio model.” In addition Best noted that the “ratings are based on the consolidated results of Heddington and its subsidiary, Heddington Insurance (U.K.) Limited. The ratings further reflect risk management programs and underwriting coordination in the design and implementation of insurance policies offered by the company as well as the cost effective manner in which those services are delivered. Heddington also gains from its parent’s global scope, which provides it with a favorable geographic distribution of risks assumed.

A.M. Best Co. has placed the financial strength rating of ‘B++’ (Good) and issuer credit rating of “bbb+” of Dominican Republic insurer La Colonial, S. A. Compania de Seguros under review with negative implications. Best said its action reflects its “inability to complete its rating analysis of La Colonial due to continued delays surrounding receipt of critical information necessary to conclude the process and following multiple requests for the information.” Best said the ratings would “remain under review pending its submission of all requested information,” and Best’s “review of that information and further discussions with La Colonial’s management.”

A.M. Best Co. has placed the financial strength rating of ‘A-‘ (Excellent) and issuer credit rating of “a-” of Trinidad & Tobago Insurance Limited (TATIL) under review with negative implications. Best said the rating actions reflect its “inability to complete its rating analysis of TATIL due to continued delays surrounding receipt of critical information necessary to conclude the process and following multiple requests for the information.” The ratings will remain under review until; best receives the information, and is able to review it, and hold “further discussions with TATIL’s management.”

A.M. Best Co. has affirmed the financial strength rating of ‘A-‘ (Excellent) and issuer credit ratings (ICR) of “a-” of the Bermuda-based Lancashire Insurance Company Limited and Lancashire Insurance Company (UK) Limited. Best also affirmed the ICR of “bbb-” and the debt rating of “bb+” on $130 million subordinated notes, due December 2035 of Lancashire Holdings Limited. The outlook for all ratings is stable. Best stated: “These rating actions reflect the group’s solid level of risk-adjusted capitalization, strong operating results since inception, focused business strategies and high quality management team. The ratings also reflect the financial flexibility of Lancashire Holdings, which benefits from its listing on the London Stock Exchange and inclusion in the FTSE 250, as well as its very modest financial leverage. Additionally, the ratings recognize the group’s enterprise risk management framework, which has appropriately supported Lancashire’s business plans and resulted in comparatively strong overall performance measures despite the challenges on both sides of the balance sheet during 2008. Since inception, Lancashire has consistently produced underwriting and overall performance measures that compare very favorably to its peer group of Bermuda Class of 2005 start-ups.” However, best indicated that “the competitive challenges arising from lower than anticipated demand for Gulf of Mexico energy insurance seen in 2009, lower yields on investments resulting from its conservative investment portfolio and the exposure to low frequency, high severity events” should be taken into account as offsetting factors. Nonetheless, Best said that the “outlook reflects the expectation that prospective operating performance will benefit from increased rates and a lack of capacity in most targeted lines of business, a solid risk management framework and disciplined and conservative operating strategies.”

A.M. Best Co. has affirmed the financial strength rating of ‘A’ (Excellent) and issuer credit rating (ICR) of “a” of the UK’s Brit Insurance Limited (BIL). Best also affirmed the ICR of “bbb” of Brit Insurance Holdings PLC (BIH) and the ratings of “bbb-“on the $15 million floating rate subordinated notes and “bbb-” on the £135 million [$220.5 million] fixed rate subordinated notes issued by BIH. The outlook for all ratings remains stable. Best said it “believes BIL will maintain strong risk-adjusted capitalization in 2009. A modest increase in shareholders’ funds is anticipated, supported by positive retained earnings. BIL is expected to produce good financial results in 2009, underpinned by solid underwriting performance (subject to normal catastrophe activity). Performance is expected to be supported by improving rates, particularly for catastrophe exposed business, within the global markets and reinsurance business units.” However, Best also noted that “despite rate improvements in certain classes of business,” it anticipates that the “UK division will place upwards pressure on BIL’s loss ratio in 2009, due to the impact of continuing intense competition on the sector as a whole.” Best also expects to see an increase in the company’s operating expenses in 2009, “reflecting a shift in its mix of business to classes where higher commissions are paid (particularly property business).” In conclusion best pointed out that “BIL benefits from the strong profile of the Brit group in the London Market and UK regions. The company writes a wide range of personal and commercial lines business through an expanding network of distribution outlets, which includes the electronic trading of smaller risks in the UK and local offices in the UK regional market.”