ALTE Alterra Capital Holdings Limited (MM)

A.M. Best Co. has allotted a financial strength rating (“FSR”) and issuer credit rating (”ICR”) to Essentia Insurance Company (Essentia), which was recently acquired by Markel Corp. (MKL). The rating agency provided an FSR of “A” and ICR of “a+” to Essentia. Both the ratings carry a stable outlook.

The ratings reflect the impact of the acquisition of Essentia by Markel and the support that the company receives from one of its partners, Evanston Insurance Company, through a 100% whole account quota share reinsurance agreement.

Post acquisition, Essentia Insurance Company will continue to underwrite insurance solely for Hagerty Insurance Agency and Hagerty Classic Marine Insurance Agency. Through Hagerty, a popular classic vehicle insurance provider, Essentia provides insurance for timeless quality vehicles like classic cars, vintage boats, motorcycles and related automotive collectibles worldwide and caters to the largest network of classic car owners.

A.M Best stated that the ratings on Essentia might be revised based on the ratings assigned to Evanston.  It also stated that the rating might be downgraded if the support from Markel and Evanston to Essentia decreases.
Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence in the stock as well as maintaining the creditworthiness in the market. We believe that the company’s present score with the credit rating agencies will help it write more business going forward.

In December 2012, Standard & Poor’s Rating Services had affirmed their long- term counterparty credit rating on Markel at “BBB” with a stable outlook. The rating came on the back of the intended acquisition of Alterra Capital Holdings Limited (ALTE), the company’s strong competitive position as well as its scale in the insurance and reinsurance market. However, A.M. Best Co. retained the ICR of ‘a+’ and FSR of ‘A’ on Markel. Concurrently, it also retained the ICR of ‘BBB’ together with the debt ratings of Alterra.

Last month, Fitch ratings reaffirmed the Issuer Default Rating (“IDR”) of The Travelers Companies Inc. (TRV), a close competitor of Markel at “A+” as per Reuters. It also maintained the senior unsecured notes at “A” and subordinated notes at “BBB+”. The IFS of the subsidiaries carried the rating of “AA”. All the ratings held a stable outlook. The rating reflected Travelers’ strong market position, consistent earnings results and a robust balance sheet.

Markel currently carries a Zacks #3 Rank (Hold). Travelers also shares the same Zacks Rank.

 
ALTERRA CAP HLD (ALTE): Free Stock Analysis Report
 
MARKEL CORP (MKL): Free Stock Analysis Report
 
TRAVELERS COS (TRV): Free Stock Analysis Report
 
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