A.M. Best revises outlook for Torus to ‘stable’ and affirms A- (Excellent) financial strength rating
30th April 2015
Press Release – APRIL 30, 2015
A.M. Best Revises Outlook to Stable for Torus Insurance Bermuda Limited and Its Subsidiaries
FOR IMMEDIATE RELEASE
LONDON – APRIL 30, 2015
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating (FSR) of A- (Excellent) and the issuer credit ratings (ICR) of “a-” of Torus Insurance (Bermuda) Limited (Torus Bermuda) (Bermuda), Torus Insurance (UK) Limited (Torus UK) (United Kingdom) and Torus Insurance (Europe) AG (Torus Europe) (Liechtenstein).
In addition, A.M. Best has revised the outlook to stable from negative and affirmed the FSR of A- (Excellent) and the ICRs of “a-” of Torus Specialty Insurance Company (Torus Specialty) and Torus National Insurance Company(Torus National) (both domiciled in Wilmington, Delaware, USA). The stable outlook reflects A. M. Best’s recognition and expectation of continuing improved performance and the operational support of Enstar Group Limited (Enstar) and Stone Point Capital LLC.
The group’s (Torus) consolidated historical financial performance has been weak with underwriting losses reported in each year since 2010. However, a pre-tax profit was achieved in 2014, and performance over 2014 and 2013 has been broadly in line with A.M. Best’s expectations. Torus’ management, supported by the group’s new owners, is committed to further improving financial performance. Action has been taken to achieve significant expense savings, and underperforming lines have been discontinued. Torus is not expected to pay dividends in the next few years, and therefore, profits would be available to support its risk-adjusted capitalisation. Nevertheless, A.M. Best believes that achieving sustainable profitable results will be challenging given the strong competition in Torus’ main business lines.
The support of Enstar and Stone Point Capital LLC is a positive rating factor. The group’s owners provide strategic and operational support to Torus and are expected to provide financial assistance, as well, if needed. Both have a proven track record of building strong and profitable insurance businesses, Enstar in insurance run-off and Stone Point in active underwriting.
The Torus group benefits from strong risk-adjusted capitalisation on a consolidated basis and for each rated operating company. Torus Bermuda operates as the carrier of most of the group’s underwriting risk through 65% quota share treaties and aggregate stop-loss contracts with Torus UK, Torus National and Torus Specialty, a 95% quota share treaty with Torus Europe and a 85% quota share treaty with Torus’ Lloyd’s corporate members. The owners are committed to maintaining risk-adjusted capitalisation at a level which is supportive of the ratings of Torus’ insurance subsidiaries. In 2014, risk-adjusted capitalisation was strengthened by a loss portfolio transfer reinsurance agreement, covering the reserves for Torus’ discontinued lines, with a cell of Fitzwilliam Insurance Limited (Fitzwilliam), which is a subsidiary of Enstar and domiciled in Bermuda.
Positive rating actions could follow if management delivers over time on plans to create a stable platform that delivers improved, sustainable financial performance. Negative rating actions could follow if Torus were to materially underperform against its own plans and A.M. Best’s expectations.
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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilised:
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
- Rating New Company Formations
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe – Rating Services Limited Supplementary Disclosure.
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