A.M. Best Assigns Ratings to Watford Specialty Insurance Company

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has assigned a financial strength rating of A- (Excellent) and an issuer credit rating of “a-” to Watford Specialty Insurance Company (WSIC) (Morristown, NJ). The outlook assigned to both ratings is stable. WSIC is a wholly owned subsidiary of Watford Re Ltd.

The ratings are based on WSIC’s strong risk-adjusted capitalization; experienced underwriting partner in Arch Underwriters Inc., a wholly owned subsidiary of Arch Capital Group Ltd.; leading investment acumen of Highbridge Principal Strategies, LLC (HPS); and WSIC’s strategic component of Watford Re Ltd.’s broad-based business plan. Partially offsetting these positive rating factors are the inherent risks associated with a start-up company and the risks associated with a subsidiary with a limited geographic footprint. In addition, the competitive market conditions in the insurance and reinsurance sectors in the United States may challenge the execution of the business plan.

A.M. Best believes that the underwriting risk coupled with the alternative investment strategy creates an elevated-risk profile that could expose WSIC on the asset and liability sides of the balance sheet. However, the skilled underwriting of Arch Capital Group Ltd. coupled with the experienced investment acumen of HPS will help manage these risks.

Key rating factors that could result in positive rating actions include Watford Re Ltd. and WSIC meeting or exceeding its business plan over the long term, which includes consistently strong operating results while maintaining strong risk-adjusted capitalization. Negative rating actions could occur if Watford Re Ltd. or WSIC’s operating performance is volatile, if the companies experience large underwriting or investing losses or if risk-adjusted capitalization becomes strained.

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.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best

Steven M. Chirico, CPA, +1 908 439 2200, ext. 5087

Assistant Vice President

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Greg Reisner, +1 908 439 2200, ext. 5224

Assistant Vice President

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Christopher Sharkey, +1 908 439 2200, ext. 5159

Manager, Public Relations

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Jim Peavy, +1 908 439 2200, ext. 5644

Assistant Vice President, Public Relations

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Source: A.M. Best