A.M. Best Affirms Ratings of Republic Companies and Assigns Issuer Credit Ratings
01 Marzo 2006 - 5:28PM
Business Wire
A.M. Best Co. has affirmed the financial strength rating (FSR) of
A- (Excellent) of Republic Companies Group (Republic) and has
assigned issuer credit ratings (ICR) of "a-" to its
property/casualty insurance operating companies. Concurrently, A.M.
Best has assigned an ICR of "bbb-" to Republic's parent, Republic
Companies Group, Inc. (Nasdaq:RUTX). The executive offices are
located in Dallas, Texas. The outlook for all ratings is stable.
The ratings recognize Republic's improved risk-adjusted
capitalization due to a continuation of its recently favorable
underwriting performance. The improvement has been derived from
management's aggressive corrective underwriting actions, enhanced
catastrophe reinsurance programs and a re-focusing of its operating
strategy as a regional writer targeting niche opportunities through
its multi-channel network, resulting in a surplus appreciation of
approximately 25% over the past two years. In addition, Republic
improved its capital base following the initial public offering
(IPO) of its parent company in August 2005, as the majority of the
IPO's proceeds were utilized to redeem preferred stock and accrued
preferred dividends. Partially offsetting these strengths is
Republic's regional concentration of risk and its exposure to
weather-related events. However, a conservative reinsurance program
mitigates this exposure both on a severity and frequency basis.
Furthermore, revised underwriting criteria and disciplined
underwriting assists in mitigating the group's potential exposures
in catastrophe prone areas. This is evident in the favorable
underwriting performance despite an active 2005 hurricane season,
in which Republic produced an underwriting profit for the second
consecutive year. This is in stark contrast to prior years, when
Republic was under previous ownership in which fluctuating
operating performance, combined with sizeable capital losses and
dividends resulted in historical surplus volatility. The FSR of A-
(Excellent) has been affirmed and ICRs of "a-" have been assigned
to Republic Companies Group and its following property/casualty
affiliates: -- Republic Fire & Casualty Insurance Company --
Republic Lloyds -- Republic Underwriters Insurance Company --
Republic-Vanguard Insurance Company -- Southern County Mutual
Insurance Company -- Southern Insurance Company -- Southern
Underwriters Insurance Company -- Southern Vanguard Insurance
Company An ICR of "bbb-" has been assigned to Republic Companies
Group, Inc. For Best's Ratings, an overview of the rating process
and rating methodologies, please visit www.ambest.com/ratings. For
current Best's Ratings, independent data and analysis on more than
3,000 individual property/casualty companies and A.M. Best groups,
please visit www.ambest.com/pc. A.M. Best Co., established in 1899,
is the world's oldest and most authoritative insurance rating and
information source. For more information, visit A.M. Best's Web
site at www.ambest.com.
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