Best Revises Transatlantic Outlook to Stable; Affirms ‘A’ Ratings

A.M. Best Co. has revised its rating outlook on Transatlantic Holdings, Inc. And its subsidiaries o stable from negative for. Best also affirmed Transatlantic’s financial strength ratings of ‘A’ (Excellent) and issuer credit ratings (ICR) of “a” of Holdings, Inc. and its group members: Transatlantic Reinsurance Company of New York and Swiss-based Trans Re Zurich as well as Transatlantic’s separately rated member, Putnam Reinsurance Company.

In addition Best has affirmed the ICR of “bbb”, debt rating of “bbb” on $750 million 5.75 percent senior unsecured notes, due 2015, as well as the indicative debt ratings of “bbb” on senior unsecured securities and “bbb-” on the subordinated securities under the shelf registration of Transatlantic Holdings, Inc

“The ratings reflect Transatlantic’s highly regarded business profile as a leading international reinsurance organization, with a diverse book of predominately casualty-oriented business,” Best explained. “The ratings also consider the group’s strong management team and successful track record of stable and consistent operating results.”

Best said that over the past year, in addition to the market challenges of operating a reinsurance organization, “Transatlantic has faced issues such as ownership uncertainty, which put pressure on areas such as employee retention, business retention and financial flexibility. These challenges were compounded by a period of severe turmoil in the financial markets.

“Transatlantic has demonstrated that its solid franchise is sufficient to overcome these potential obstacles. Throughout 2009, a benign catastrophe season coupled with a robust recovery in the financial markets has aided Transatlantic in strengthening its balance sheet. Best said it had therefore concluded that any previous concerns “regarding the Transatlantic franchise have been alleviated, thereby warranting the revision in the outlook.”

However, Best did note that the “soft casualty market, from which Transatlantic derives a significant portion of its premiums as well as reserve adequacy on casualty-oriented business,” should be taken into account as offsetting factors.

“While Transatlantic has experienced favorable loss reserve development and/or modest unfavorable development over the last two years, A.M. Best will continue to closely monitor its reserve adequacy and potential exposure to inflation pressures,” the bulletin concluded.

Source: A.M. Best = www.ambest.com