AM Best Places Credit Ratings of Watford Re Ltd. and Its Subsidiaries Under Review with Negative Implications

OLDWICK, N.J.--()--AM Best has placed under review with negative implications the Financial Strength Rating of A- (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a-” of Watford Re Ltd. (Watford Re) (Bermuda) and its subsidiaries, Watford Insurance Company Europe Limited (WICE) (Gibraltar), Watford Insurance Company (WIC) (New Jersey) and Watford Specialty Insurance Company (WSIC) (New Jersey). In addition, AM Best has placed under review with negative implications the Long-Term ICR of “bbb-” and the Long-Term Issue Credit Rating of “bb” on the $225 million ($52 million outstanding) 8.5% cumulative preference shares of Watford Holdings Ltd. (Watford) (Bermuda), the group’s ultimate holding company.

These rating actions follow Watford’s announcement on April 23, 2020 that its 2020 first quarter earnings will include a net investment loss of approximately $300 million due to investment market volatility following the global economic shutdown related to the COVID-19 pandemic. The net investment loss is expected to be predominantly comprised of unrealized mark-to-market losses to Watford’s non-investment grade, fixed-income portfolio.

AM Best expects to resolve the under review with negative implications status when Watford’s risk-adjusted capitalization is restored back to its prior level. AM Best will evaluate on an ongoing basis Watford’s risk-adjusted capitalization and invested asset valuations as updated information becomes available. Further rating actions could be taken if AM Best believes Watford’s financial strength has continued to decay or it has not stabilized in a reasonable amount of time. Further rating action may also be taken if AM Best believes Watford’s measured levels of balance sheet strength, operating performance, business profile, or enterprise risk management are no longer able to support its current rating level.

This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Darian Ryan CPA
Senior Financial Analyst
+1 908 439 2200, ext. 5449
darian.ryan@ambest.com

Steven M. Chirico, CPA
Director
+1 908 439 2200, ext. 5087
steven.chirico@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com

Contacts

Darian Ryan CPA
Senior Financial Analyst
+1 908 439 2200, ext. 5449
darian.ryan@ambest.com

Steven M. Chirico, CPA
Director
+1 908 439 2200, ext. 5087
steven.chirico@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Jim Peavy
Director, Public Relations
+1 908 439 2200, ext. 5644
james.peavy@ambest.com