A.M. Best Downgrades Credit Ratings of DuraRock Reinsurance, Ltd.
Concurrently,
The ratings of DuraRock reflect its balance sheet strength, which
The downgrade of DuraRock’s ratings is based on A.M. Best’s evaluation of the company’s quality and concentration of assets and its increased dependence on one single investment, which has appreciated in value in recent years. This large single investment also accounts for the majority of its capital and capital growth in recent years. As a result, much of the company’s investment earnings are tied to this investment. While having ready access to business sourced by Cherokee, DuraRock’s business remains somewhat narrowly focused, although it is viewed to be strategic and complementary to Cherokee and the needs of their clients. DuraRock also benefits from its low underwriting leverage, good operating results and its appropriate risk management philosophy. The ratings could be downgraded if there were a material drop in the company’s capitalization or operating results. DuraRock’s heightened investment leverage also could produce negative rating pressure.
Currently, all of DuraRock’s business is derived from Cherokee. The ratings of Cherokee reflect its balance sheet strength, which
This press release relates to Credit Ratings 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. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and
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