Best Affirms Torus Insurance and Operating Subsidiaries Ratings

A.M. Best Europe – Rating Services Limited has affirmed the financial strength ratings of ‘A-‘ (Excellent) and issuer credit ratings (ICR) of “a-” of Torus Insurance (Bermuda) Limited, Torus Insurance (UK) Limited, Torus Specialty Insurance Company and Torus National Insurance Company, both of which are domiciled in Wilmington, Delaware, as well as Torus Insurance Europe AG, which is domiciled in Liechtenstein.

Best also affirmed the ICR of “bbb-” of Torus Insurance Holdings Limited, the group’s ultimate parent holding company. The outlook for all of the ratings remains stable.

The ratings of the Torus group reflect Best’s expectation that “consolidated risk-adjusted capitalization will remain strong,” said the bulletin. “Additionally, stand-alone risk-adjusted capitalization at each Torus group subsidiary is expected to remain supportive of its rating level.”

Best pointed out that Torus Bermuda “operates as the recipient of the majority of the group’s risk through a 65 percent quota share and an aggregate stop loss of Torus UK. In turn, Torus UK provides the same cover to Torus Specialty and Torus National. Torus Bermuda also provides reinsurance support to Torus Europe through a 95 percent quota share arrangement.”

As an offsetting factor, Best said it believes that although “risk-adjusted capitalization is sufficient to support growth…the level of growth anticipated in the US market… will be difficult to achieve given current challenging market conditions without an adverse effect on performance.” As a result Best indicated it would “continue to closely monitor Torus’ growth and performance at each individual operating entity.

“In 2010, a technical loss is anticipated reflecting Torus’ exposure to the major loss events of the year to date, including the Chilean earthquake and the Deepwater Horizon oil rig explosion, and the high expenses associated with the group’s expansion.”

Best added, however, that despite these setbacks, it “anticipates a consolidated pre-tax profit, albeit lower than the $43.8 million reported in 2009. Performance in 2009 benefitted from the absence of significant catastrophe losses during the year and a solid investment return from the group’s cash and highly rated fixed income portfolio.”

In addition Best noted that Torus “continues to develop its business profile in the London, Bermudian, US (surplus and admitted lines) and continental European markets. The group’s underwriting portfolio has evolved rapidly since Torus’ formation in 2008 as a specialist underwriter of energy and large commercial risks, and it now includes property, casualty, specialty and treaty business.

“Growth in 2010 and 2011 is expected to emanate from the casualty and specialty lines of business as the group diversifies its underwriting portfolio, supported by acquisitions in 2010 of Torus Europe (formerly Glacier Insurance AG) and the shell company, Torus National (formerly TIG Indemnity Company), which provide access to the European and US admitted markets, respectively.”

Source: A.M. Best