A.M. Best Affirms Ratings of Seaworthy Insurance Company

OLDWICK, N.J.--()--A.M. Best Co. has affirmed the financial strength rating of A+ (Superior) and issuer credit rating of “aa” of Seaworthy Insurance Company (Seaworthy) (Annapolis, MD). The outlook for both ratings is stable.

The ratings reflect Seaworthy’s supportive capitalization, historically favorable underwriting results indicative of the inherent benefits and advantages afforded by management’s specialty niche ocean marine expertise, as well as the implicit and explicit financial support provided by the ultimate parent, Berkshire Hathaway Inc. (Berkshire), and a Berkshire subsidiary in the form of significant reinsurance transactions.

The ratings also take into consideration the increased reinsurance protection provided by National Indemnity Company (NICO) (Omaha, NE), as well as the reinsurance previously provided by NICO via 50% loss portfolio transfer and 50% quota share reinsurance provided at the time of Berkshire’s acquisition of Seaworthy and its parent, Boat America Corporation, in August 2007. At December 31, 2012, the loss portfolio agreement was increased to 75%, and effective January 1, 2013, the quota share was increased to 75%. In addition to Berkshire’s track record of supporting its member companies, these transactions demonstrate in effect the explicit commitment provided by Berkshire, for which Seaworthy receives rating enhancement.

These positive rating factors are partially offset by Seaworthy’s significant product concentration, its susceptibility to large catastrophe events as evidenced in 2012 and the risks associated with expansion beyond members of the Boat Owners Association of The United States. Seaworthy is also challenged by the prevailing low interest rate environment and emphasis in highly liquid, low credit risk assets comprised mostly of cash and equities. Despite these factors, the outlook is based upon the expectation of a return to profitability, the continued financial flexibility provided by Berkshire, its strong balance sheet and the continued advantages garnered by Seaworthy’s lead specialty niche expertise.

Negative rating action could occur if Seaworthy’s capitalization and/or operating performance falls markedly short of A.M. Best’s expectations as a result of significant deterioration in loss trends, and any sudden change in parental commitment. Given Seaworthy’s limited business scope, the ratings also are subject to any sudden shifts within its core market niche, a drastic change in its business profile and any sudden and unforeseen disruption in its distribution.

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.

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 RESERVED.

Contacts

A.M. Best Co.
Richelle Bryan, 908-439-2200, ext. 5344
Financial Analyst
richelle.bryan@ambest.com
or
Joseph Roethel, 908-439-2200, ext. 5630
Assistant Vice President
joseph.roethel@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com

Contacts

A.M. Best Co.
Richelle Bryan, 908-439-2200, ext. 5344
Financial Analyst
richelle.bryan@ambest.com
or
Joseph Roethel, 908-439-2200, ext. 5630
Assistant Vice President
joseph.roethel@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
rachelle.morrow@ambest.com
or
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
james.peavy@ambest.com