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.