A.M. Best Affirms Ratings of Montpelier Reinsurance and Montpelier Re Holdings [Manufacturing Close – Up]

A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating (ICR) of "a" of Montpelier Reinsurance (Montpelier Re).

According to a release, additionally, A.M. Best has affirmed the ICR of "bbb" and debt ratings of the parent company, Montpelier Re Holdings. The outlook for all ratings is stable. Both companies are domiciled in Pembroke, Bermuda.

The ratings reflect Montpelier Re's risk-adjusted capitalization, solid long-term operating performance, diversified business profile, good competitive position, experienced management team and enterprise risk management framework.

Partially offsetting these strengths is Montpelier Re's susceptibility to low frequency, high severity losses as a global property catastrophe focused reinsurer. However, the company's risk- adjusted capital levels have been stress tested to withstand significant catastrophe losses, thereby mitigating this concern. The stable outlook reflects Montpelier Re's overall financial flexibility, access to the capital markets and adequate rate environment in its targeted lines of business.

While Montpelier Re's business activities are concentrated in catastrophe-exposed property lines of business, its Lloyd's Syndicate 5151 platform provides additional diversification in terms of business mix, geographic spread and distribution capabilities. Montpelier Re continues to follow a prudent underwriting strategy to limit the potential accumulation of losses from a single large catastrophic event. Montpelier Re's management monitors its underwriting constraints relative to capital-based limits established by its board of directors and diversifies its exposure around the world to achieve a desired optimal spread of risk.

Rating factors that could lead to a positive outlook and/or rating upgrades include Montpelier Re maintaining strong risk- adjusted capital levels and the continuation of its long-term, consistently strong operating profitability relative to its peer group. Rating factors that could lead to a negative outlook and/or a downgrading of the ratings include outsized catastrophe or investment losses relative to the company's peer group, unfavorable operating profitability trends and a significant decline in its risk- adjusted capital that would not be supportive of the current rating level.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides an explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process.

A.M. Best Company is an insurance rating and information source.

More information:

www.ambest.com/ratings/methodology

www.ambest.com

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