Best Affirms White Mountains, Subsidiaries Ratings; Outlook Stable

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A’ (Excellent) and the issuer credit ratings (ICR) of “a” of the U.S. operating companies comprising OneBeacon Insurance Group, and the FSR of ‘A-‘ (Excellent) and ICRs of “a-” of the U.S. operating companies comprising Esurance Insurance Group.

Best has also affirmed the ICR of “bbb” of OneBeacon’s publicly traded parent, OneBeacon Insurance Group, Ltd., which is headquartered in Bermuda and its intermediated holding company, OneBeacon U.S. Holdings, Inc. (Minnetonka, MN).

In addition Best has affirmed the FSR of ‘A-‘ (Excellent) and ICR of “a-” of New York-based White Mountains Reinsurance Company of America (WMRe America) and the ICR of “bbb-” as well as the debt ratings of its intermediate parent holding company, White Mountains Re Group Ltd., as well as the ICR of “bbb” and debt ratings of the group’s ultimate parent, White Mountains Insurance Group, Ltd., also located in Bermuda.

The outlook for all of the ratings is stable.

White Mountains’ ratings reflect its “strong financial flexibility and the solid operating results generated through its operating subsidiaries,” said Best.

OneBeacon’s ratings reflect its “sound risk-adjusted capitalization and strong earnings through its favorable underwriting and operating performance. The ratings also consider the financial flexibility of OneBeacon U.S. and OneBeacon Ltd. These positive rating factors are partially offset by OneBeacon’s weak underwriting and operating performance prior to 2003, largely related to adverse development on its run-off operations.”

Esurance’s ratings recognize its “solid risk-adjusted capitalization and the ongoing support of White Mountains. Offsetting these positive rating factors is the group’s high rate of premium growth, significant reinsurance dependence and continued underwriting losses (as it continues to invest in marketing to grow its policyholder base), which generate weak operating results relative to its personal auto peers.

WMRe America’s ratings “acknowledge its enhanced risk management and strategic importance to White Mountains, as well as its long-term market presence and excellent level of risk-adjusted capitalization. As a result of these strategies, WMRe America achieved positive underwriting results in 2009 and combined with net realized capital gains, increased the overall capital base of the company.

“Offsetting these factors is the volatility in WMRe America’s overall operating performance. In 2010, WMRe America incurred significant losses from the Chilean earthquake, and in 2008, the company incurred significant net realized capital losses and charges resulting from the strengthening of prior accident years’ loss reserves.

For a complete list of White Mountains Insurance Group, Ltd. and its subsidiaries’ FSRs, ICRs and debt ratings, go to: please see www.ambest.com/press/091301whitemountain.pdf.

Source: A.M. Best