AM Best Affirms Credit Ratings of Alleghany Corporation, Transatlantic Reinsurance Company and Members of RSUI Group; Revises Issuer Credit Rating Outlook to Positive for CapSpecialty Insurance Group Members

OLDWICK, N.J.--(BUSINESS WIRE)--AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) of Transatlantic Reinsurance Company (New York, NY) and its subsidiaries (collectively referred to as TransRe). In addition, AM Best has affirmed the Long-Term ICRs and the Long-Term Issue Credit Ratings (Long-Term IRs) of “a-” (Excellent) of Alleghany Corporation (Alleghany) [NYSE:Y] and Transatlantic Holdings, Inc. Alleghany and Transatlantic Holdings, Inc. are headquartered in New York, NY. The outlook of these Credit Ratings (ratings) is stable.

AM Best also has revised the outlook to positive from stable for the Long-Term ICR and affirmed the FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) of Capitol Indemnity Corporation and its two subsidiaries, which operate under a pooling agreement, collectively referred to as CapSpecialty Insurance Group (CapSpecialty) (headquartered in Middleton, WI). The outlook of the group’s FSR is stable.

Concurrently, AM Best has affirmed the FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of RSUI Indemnity Company and its reinsured subsidiaries, collectively referred to as RSUI Group (RSUI) (headquartered in Atlanta, GA). The outlook of these ratings is stable. (Please see below for a detailed listing of the companies and ratings).

The ratings of TransRe reflect its balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, very favorable business profile and appropriate enterprise risk management (ERM). TransRe continues to maintain a robust business profile with a highly diversified book of business in terms of geography and product offerings. TransRe also maintains the strongest level of risk-adjusted capitalization even under stressed scenarios, as measured by Best’s Capital Adequacy Ratio (BCAR), and AM Best considers TransRe’s quality of capital to be a positive factor for its ratings. TransRe consistently has delivered solid results over the reinsurance cycle, and although it remains exposed to catastrophe events worldwide, AM Best expects it to produce favorable earnings driven by underwriting income and complemented by investment income.

The ratings of CapSpecialty reflect its balance sheet strength, which AM Best assesses as very strong, as well as its marginal operating performance, neutral business profile and appropriate ERM. The positive outlook for CapSpecialty’s Long-Term ICR reflects AM Best’s expectation that ongoing strategic initiatives focused on improving operational efficiencies will continue to drive improvement in the group’s expense structure, enabling it to sustain or further improve on its recent performance.

AM Best assesses CapSpecialty’s operating performance as marginal, which is reflective largely of its overall return metrics and an expense ratio that has improved but continues to lag the industry. However, CapSpecialty maintains a loss ratio that is well-below its peers, and it continues to reposition its book of business to a more prudent risk selection. Going forward, AM Best expects CapSpecialty to continue working toward improving its expense ratio and deliver operating results that are more in line with the industry.

The ratings of RSUI reflect the group’s balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate ERM.

RSUI continues to maintain an exceptional track record of strong operating performance driven by solid underwriting results that have outperformed the industry consistently. The group has been able to remain successfully relevant in a highly competitive environment, and AM Best expects that RSUI will continue to maintain a strong position in the market and continue to deliver strong results while maintaining the strongest level of risk-adjusted capitalization, as measured by BCAR.

Alleghany’s ratings are based on the organization’s historical earnings results, its low levels of financial leverage and favorable financial flexibility, as well as its consistent track record of supporting its insurance operations.

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with stable outlooks for Transatlantic Reinsurance Company and its following subsidiaries:

• TransRe Europe S.A.
• TransRe London Limited
• Fair American Insurance and Reinsurance Company
• Fair American Select Insurance Company
• Calpe Insurance Company Limited

The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with stable outlooks for the following members of RSUI Group:

• RSUI Indemnity Company
• Landmark American Insurance Company
• Covington Specialty Insurance Company

The FSR of A (Excellent) and the Long-Term ICRs of “a” (Excellent) have been affirmed, with the Long-Term ICR outlook revised to a positive from stable and the FSR outlook at stable for the following members of CapSpecialty Insurance Group:

• Capitol Indemnity Corporation
• Platte River Insurance Company
• Capitol Specialty Insurance Corporation

The following Long-Term IRs have been affirmed with stable outlooks:

Alleghany Corporation—
-- “a-” (Excellent) on $400 million floating rate senior unsecured notes, due 2022
-- “a-” (Excellent) on $300 million 4.9% senior unsecured notes, due 2044

Transatlantic Holdings Inc.—
-- “a-” (Excellent) on $350 million 8% senior unsecured notes, due 2039

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 use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

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