A.M. Best Assigns Ratings to Torus Insurance (UK) Limited and Torus Insurance (Bermuda) Limited

OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best Co. has assigned a financial strength rating (FSR) of A- (Excellent) and an issuer credit rating (ICR) of “a-” to Torus Insurance (UK) Limited (Torus UK) (United Kingdom) and Torus Insurance (Bermuda) Limited (Torus Bermuda) (Bermuda). Concurrently, A.M. Best has assigned an ICR of “bbb-” to Torus Insurance Holdings Limited (Torus) (Bermuda). The outlook for all ratings is stable.

Torus is the Bermudian holding company of two newly established insurance companies, Torus UK, an FSA registered UK company, and Torus Bermuda, a Class-4 insurer domiciled in Bermuda. Torus has been initially capitalised with approximately USD 700 million of common shareholders’ equity, which has been provided by First Reserve Corporation, a private equity fund manager with a 25-year history of investing exclusively in the energy industry (including energy-related financial and insurance businesses).

Initially, all of the group’s business will be written by Torus UK. However, Torus Bermuda will operate as a recipient of the majority of the group’s risk through a 65% quota share and an aggregate stop loss of Torus UK. The group’s initial business plan encompasses offshore and onshore energy risks, power and utility risks, and engineering-intensive property insurance.

The account written will be focused on risks in North America, Europe, Australasia and the Middle East.

A.M. Best believes the Torus group’s consolidated risk-adjusted capitalisation is likely to be maintained at a strong level, based on performance forecasts and A.M. Best’s specific insurance start-up criteria. Although premium rates in targeted business lines continue to decline, pricing is expected to remain at a level sufficient to support operating profitability, assuming normal catastrophe experience. In addition, risk selection and pricing is likely to benefit from the engineer site evaluations and technical pricing models that will be embedded in the group’s underwriting process.

A.M. Best believes the likelihood of successful execution of Torus’ business plan is enhanced by a senior management and underwriting team that has extensive experience in the insurance industry and the targeted classes of business. The group’s interim chief executive is its chief underwriting officer, David Hope, and A.M. Best is aware of the industry executive who will ultimately assume the position of chief executive. A.M. Best is satisfied that this person is committed to Torus and has played a key role in the development of the group’s business plan.

Offsetting these strengths is the strong competition Torus is expected to face within its core business lines from well-established insurers. In addition, the group faces the considerable challenge of building and retaining market acceptance and successfully growing its business profitably as rates and conditions in core markets deteriorate. A.M. Best will closely monitor the quarterly performance of the group against its stated operating plan, and any material deviations in terms of management, earnings, capitalisation or risk profile could result in downward pressure on the assigned ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.