Company Website:
http://www.ambest.com
OLDWICK, N.J. -- (Business Wire)
A.M. Best has revised the outlook of the issuer credit ratings
(ICR) to positive from stable and affirmed the financial strength rating
(FSR) of A++ (Superior) and the ICRs of “aa+”of the property/casualty
subsidiaries of The Chubb Corporation (Chubb Corp) [NYSE: CB],
also known as the Chubb Group of Insurance Companies (Chubb
Group). The outlook for the FSR is stable. Concurrently, A.M. Best has
affirmed the ICR of “aa-”, all long-term debt and indicative ratings and
the AMB-1+ on the commercial paper of Chubb Corp. The outlook for the
ICR and all debt ratings has been revised to positive from stable, with
the exception of the commercial paper, which does not have an outlook.
A.M. Best also has affirmed the FSR of A++ (Superior) and ICR of “aa+”
of Chubb Atlantic Indemnity Ltd. (Chubb Atlantic) (Pembroke,
Bermuda). The outlook for both ratings is stable.
In addition, A.M. Best has withdrawn the FSR of A++ (Superior) and ICR
of “aa+” of Northwestern Pacific Indemnity Company (Northwestern
Pacific) (Portland OR), following its February 12, 2014 sale to Cottage
Insurance Holdings (Cottage). All companies are headquartered in Warren,
NJ, except where specified. (See below for a detailed listing of the
companies and ratings.)
The rating affirmations reflect the Chubb Group’s superior risk-adjusted
capitalization, excellent underwriting and overall operating
performance, and the sustainable competitive advantages within its
specialty and upscale personal insurance businesses, as demonstrated by
its consistent outperformance of industry peers.
The ratings also recognize Chubb Group’s comprehensive and proactive
enterprise risk management, disciplined underwriting practices, strong
franchise recognition and access to the capital markets through Chubb
Corp. The group’s positive rating attributes are enhanced by its
position as a leading insurer in the United States and its global
presence in specialty markets.
The strength of Chubb Group’s balance sheet is derived from its
consistent generation of underwriting results, despite the recent impact
of catastrophes and competitive market conditions. Additionally, the
group benefits from a well-diversified book of business, which has led
to excellent risk-adjusted capitalization. Chubb Group’s results also
benefit from an above average total return on invested assets and strong
underwriting and operating cash flows.
These positive rating factors are partially offset by challenging market
conditions and catastrophe and other weather-related losses, which have
impacted Chubb Group’s underwriting performance in three out of the last
five years. Catastrophe losses added approximately six, nine and 10
points to the group’s combined ratios for 2010, 2011 and 2012,
respectively. Management remains focused on limiting exposures through
actively monitoring these risks and maintaining a prudent reinsurance
program. In addition, the group has historically recognized adverse
development of the loss reserves associated with its asbestos and
environmental liabilities, although overall development of loss reserves
has been favorable in the majority of the accident and calendar years.
Given Chubb Group’s leading market position, specialty niche
underwriting focus, prudent balance sheet liquidity, strong cash flows
and excellent risk-adjusted capitalization, A.M. Best considers it
favorably positioned and sufficiently capitalized to absorb these
challenges and those posed by the continued competitive market.
Chubb Atlantic’s ratings recognize its solid risk-adjusted
capitalization and the implicit and explicit support provided by Chubb
Corp. This financial support is evidenced by the capital contributions
Chubb Corp. has made in recent years to support the operations of Chubb
Atlantic and its subsidiary, Chubb do Brasil Companhia de Seguros (Brazil).
Furthermore, Chubb Atlantic is the beneficiary of sizable irrevocable
letters of credit issued by banks on behalf of Chubb Corp.
The ratings also reflect Chubb Atlantic’s strategic importance within
the Chubb Group, including its quota share reinsurance assumed from
affiliates. These positive rating factors are partially offset by the
volatility in Chubb Atlantic’s underwriting performance in prior years,
largely due to adverse loss reserve development.
Chubb Corp.’s debt-to-tangible capital ratio is maintained at a modest
18% as of December 31, 2013. Despite the company’s ongoing share
repurchase program, liquid assets at the holding company are expected to
be maintained at a level more than sufficient to cover annual holding
company expenses.
Future positive rating actions may result from the group’s continued
strong underwriting and operating performance. However, negative rating
actions could result if operating performance or risk-adjusted
capitalization falls markedly short of A.M. Best’s expectations.
The withdrawal of the ratings for Northwestern Pacific reflects its sale
to Cottage, which does not participate in A.M. Best’s interactive rating
process. As part of the transaction, all of Northwestern Pacific’s
liabilities for its activities prior to the sale (including all
previously written policies) were assumed by Pacific Indemnity Company,
another member of the Chubb Group.
The FSR of A++ (Superior) and the ICRs of “aa+”have been affirmed for
the following property/casualty subsidiaries of The Chubb Corporation:
- Federal Insurance Company
- Chubb Custom Insurance Company
- Chubb Indemnity Insurance Company
- Chubb Insurance Company of Australia Limited
- Chubb Insurance Company of Europe SE
- Chubb Insurance Company of Canada
- Chubb National Insurance Company
- Executive Risk Indemnity Inc.
- Executive Risk Specialty Insurance Company
- Great Northern Insurance Company
- Pacific Indemnity Company
- Vigilant Insurance Company
- Chubb Insurance Company of New Jersey
- Chubb Lloyds Insurance Company of Texas
- Texas Pacific Indemnity Company
The following debt rating has been affirmed:
The Chubb Corporation—
- AMB-1+ on commercial paper
The following debt ratings have been affirmed:
The Chubb Corporation—
- “aa-” on $600 million 6.5% senior unsecured notes, due 2038
- “aa-” on $600 million 5.75% senior unsecured notes, due 2018
- “aa-” on $800 million 6.0% senior unsecured notes, due 2037
- “aa-” on $200 million 6.8% senior unsecured debentures, due 2031
- “aa-” on $100 million 6.6% senior unsecured debentures, due 2018
- “a” on $1 billion 6.375% junior subordinated debentures, due 2067
The following indicative ratings on securities available under the shelf
registration have been affirmed:
The Chubb Corporation—
- “aa-” on senior unsecured debt
- “a+” on subordinated debt
- “a+” on preferred securities
- “a” on preferred stock
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 © 2014 by A.M. Best Company, Inc.ALL RIGHTS
RESERVED.
Contacts:
A.M. Best
Brian O’Larte, 908-439-2200, ext. 5138
Senior
Financial Analyst
brian.olarte@ambest.com
or
Jennifer
Marshall, 908-439-2200, ext. 5327
Assistant Vice President
jennifer.marshall@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
Source: A.M. Best
© 2024 Canjex Publishing Ltd. All rights reserved.