Credit ratings agency A.M. Best has affirmed its Financial
Strength Rating (FSR) and Issuer Credit Rating (ICR) on
Navigators Insurance Company (Navigators) and its wholly owned
and 100% reinsured subsidiary, Navigators Specialty Insurance
Company (Specialty). Navigators writes the insurance businesses
The Navigators Group Inc.
). The rating agency provided FSR of "A" (Excellent) and ICR of
"a+" to Navigators and Specialty.
It also affirmed the ICR of "bbb+" and the debt ratings of "bbb+"
on the 7% senior unsecured notes worth $114 million, scheduled to
mature in 2016 and the shelf ratings of "bbb+" on senior
unsecured notes, "bbb" on subordinated notes and "bbb-" on
preferred securities of the parent company, Navigators Inc. All
the ratings carried a stable outlook.
The rating affirmation came on the back of robust
risk-adjusted capitalization of the company owing to steady
operating profitability. Management's conservative approach
towards controlling the business by means of comprehensive risk
selection, underwriting and claims handling processes, while
balancing and diversifying Navigators' portfolio was also
accounted for in the affirmation.
However, these positive factors were mitigated by the
underwriting results, which in recent years have exhibited a
decline over that of the prior years. The underwriting results
were affected by adverse development of prior years' loss
reserves of the company. Moreover, Navigators was affected by
catastrophe losses from U.S. drought, Superstorm Sandy and the
Costa Concordia disaster which were partially mitigated by the
improvement in non-catastrophe losses.
Low debt levels of the company reflected in the 12.5%
debt-to-capital ratio of Navigators Inc. and coverage and
operating ratios surpassing A.M. Best's requirements for the
current rating level contributed to the rating affirmation.
The stable outlook on the ratings came on the back of a
probable consistency in Navigators' capitalization and operating
profits in tandem with its historical levels of performance.
Rating affirmations or upgrades from credit rating agencies
play an important part in retaining investor confidence in the
stock as well as maintaining creditworthiness in the market. We
believe that the company's present score with the credit rating
agency will help it write more business going forward.
Navigators currently carries a Zacks Rank #2 (Buy). Among
Montpelier Re Holdings Limited
American Safety Insurance Holdings Limited
Platinum Underwriters Holdings Limited
) carry a favorable Zacks Rank #1 (Strong Buy) and appear
AMER SAFETY INS (ASI): Free Stock Analysis
MONTPELIER RE (MRH): Free Stock Analysis
NAVIGATORS GRP (NAVG): Free Stock Analysis
PLATINUM UNDRWT (PTP): Free Stock Analysis
To read this article on Zacks.com click here.