A.M. Best Co. has confirmed the Financial Strength Rating (FSR) and Issuer Credit Rating (ICR) of Montpelier Reinsurance Ltd. (Montpelier Re). Montpelier Re is a wholly owned subsidiary of Montpelier Re Holdings Limited (MRH). The rating agency provided an FSR of “A” (Excellent) and ICR of “a” to Montpelier Re. It also affirmed the ICR of “bbb” and debt ratings of Montpelier Re Holdings. All the ratings carried a stable outlook.
The rating affirmation came on the back of a number of factors. These include the company’s solid risk-adjusted capitalization, superb long-term operating performance, a well-diversified business portfolio, strong competitive position, a management team with much expertise and strong enterprise risk management structure.
However, the rating agency pointed out that being a global property catastrophe focused reinsurer, the company is vulnerable to low frequency, high severity losses which partially offsets the positives. Nevertheless, this aspect is taken care of by the company’s robust risk-adjusted capital levels.
The stable outlook assigned on the ratings of Montpelier Re was on account of the company’s financial flexibility, capital market accessibility and favorable rate environment in its targeted line of business.
A.M. Best stated that an upward revision in the ratings or outlook can take place if the company continues to maintain strong risk-adjusted capital levels and consistently delivers strong operating profitability compared to its peers.
Rating affirmations from credit rating agencies play an important part in retaining investor confidence in the stock as well as maintaining the creditworthiness in the market. We believe that the company’s present score with the credit rating agencies will help it write more business going forward.
Earlier in Sep 2012, Fitch Ratings upgraded the ratings on Montpelier Re Holdings and its subsidiary, Montpelier Re. The senior unsecured debt ratings of MRH was upgraded to “BBB+” from “BBB” and the Insurer Financial Strength (IFS) rating of Montpelier Re was upgraded to “A” from “A–”.
Montpelier currently carries a Zacks Rank #1 (Strong Buy). Among others in the industry, AXIS Capital Holdings Limited (AXS), Global Indemnity plc (GBLI) and Homeowners Choice Inc. (HCI) carry the same Zacks Rank and appear impressive.
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