|[March 05, 2013]
A.M. Best Affirms Ratings of Arden Reinsurance Company Ltd. and Arden Holdings, Ltd.
OLDWICK, N.J. --(Business Wire)--
A.M. Best Co. has affirmed the financial strength rating of A-
(Excellent) and issuer credit rating (ICR) of "a-" of Arden
Reinsurance Company Ltd. (Arden Re). Additionally, A.M. Best has
affirmed the ICR of "bbb-" of the parent company, Arden Holdings,
Ltd. (Arden Holdings) (both domiciled in Bermuda). The outlook for
all ratings is stable.
The ratings of Arden Re (formerly Ariel Reinsurance Company Ltd) reflect
its strong level of risk-adjusted capitalization, favorable operating
performance and solid enterprise risk management capabilities. These
strengths are partially offset by Arden Re's limited business profile
following the sale of its insurance and reinsurance operations to The
Goldman Sachs Group, Inc. (Goldman) and the sale of its Zurich-based
credit and surety operations to Arch Capital Holdings Ltd. in April
2012. As a result of these transactions, Arden Re is a much smaller
entity with a significantly reduced risk profile. Arden Re continues to
assume the business underwritten by its Lloyd's affiliate, Atrium
Underwriting Group Limited (Atrium), under an existing quota share
arrangement that remains in force. This business has historically proen
to be very profitable, and Arden Re will in effect be managed by the
successful management team at Atrium.
Arden Re's risk-adjusted capitalization remains supportive of its
current ratings and considers the counterparty credit exposure that
resulted from the loss portfolio transfer of underwriting liabilities to
the Goldman Lloyd's syndicate. This credit exposure also is
significantly mitigated by collateral, which will be held through the
run-off of these obligations.
The outlook reflects A.M. Best's expectation that Arden Re's overall
operating results will remain positive and its risk-adjusted capital
level will continue to be supportive of the current ratings.
Upward movement in the ratings is unlikely at the present time. The
rating factors that could lead to a negative outlook or a downgrading of
the ratings include unfavorable operating profitability trends, outsized
investment losses and a significant decline in 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 a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Key criteria utilized include: "Risk
Management and the Rating Process for Insurance Companies";
"Understanding Universal BCAR"; "Catastrophe Analysis in A.M. Best
Ratings"; and "Insurance Holding Company and Debt Ratings." Best's
Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Founded in 1899, A.M. Best Company is the world's oldest and most
authoritative insurance rating and information source. For more
information, visit www.ambest.com.
Copyright © 2013 by A.M. Best Company, Inc. ALL RIGHTS
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