A.M. Best Affirms Ratings of Allied World Assurance Company Holdings, AG and Its Subsidiaries
February 11, 2016 at 10:47 AM EST
A.M. Best has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of “a+” of Allied World Assurance Company, Ltd (Allied World) and its operating affiliates. The outlook for all ratings is stable.
Concurrently, A.M. Best has affirmed the ICRs of “bbb+” of the ultimate parent, Allied World Assurance Company Holdings, AG (AWH) (Switzerland) [NYSE: AWH], and its downstream holding company Allied World Assurance Company Holdings, Ltd (Allied World Holdings Bermuda). A.M. Best also has affirmed the issue ratings of “bbb+” of Allied World Holdings Bermuda. The outlook for these ratings is stable. All the above companies are domiciled in Bermuda, unless otherwise specified. (See below for a detailed listing of the companies and issue ratings).
The ratings reflect Allied World’s diversified business mix that emphasizes primary/casualty lines, excellent risk-adjusted capitalization, experienced management team and comprehensive enterprise risk management framework. The ratings also reflect the company’s strong operating performance over the recent five-year period, proven risk management culture and successful track record of expansion in terms of geography, products and distribution. Allied World is well-positioned to execute its business plans.
Partially offsetting these positive rating factors is Allied World’s primary casualty orientation, as pricing for this segment of business is cyclical and currently very competitive. The longer-tail nature of this business lends to greater uncertainty as regards reserve adequacy. Nonetheless, Allied World has chosen a targeted business strategy, while taking steps to refine its cycle management capability. Allied World’s focus on casualty business also has helped to limit its exposure to the global catastrophes that have taken place over the past few years and somewhat insulates the company from convergence capital that has mainly been focused on property catastrophe business. Furthermore, Allied World appears to have a prudent reserving philosophy, maintaining a significant cushion of incurred but not reported reserves. This conservative reserving posture has enabled the company to consistently recognize net overall favorable loss reserve development since its inception in 2001 and has contributed to its strong operating returns through the current soft phase of the casualty market. This benefit has been tapering for Allied World, and adverse loss reserve development on specific classes have impacted recent quarterly results. That being said, in the aggregate, A.M. Best does not currently have significant concerns regarding Allied World’s reserves, but it is an area that A.M. Best will continue to closely monitor.
The FSR of A (Excellent) and the ICRs of “a+” have been affirmed for Allied World Assurance Company, Ltd and its operating affiliates:
The following issue ratings have been affirmed:
Allied World Assurance Company Holdings, Ltd—
-- "bbb+" on $300 million 5.5% senior unsecured notes, due 2020
-- "bbb+" on $500 million 7.5% senior unsecured notes, due 2016
-- "bbb+" on $500 million 4.35% senior unsecured notes, due 2025 (all notes are unconditionally and irrevocably guaranteed by AWH)
This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see A.M. Best’s Recent Rating Activity web page.
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