AM Best Downgrades Credit Ratings of Catlin Specialty Insurance Company; Places Credit Ratings Under Review With Negative Implications

Rhea-AI Summary

AM Best has downgraded the Financial Strength Rating (FSR) of Catlin Specialty Insurance Company from A+ (Superior) to A (Excellent) and the Long-Term Issuer Credit Rating (ICR) from aa- (Superior) to a (Excellent). Both ratings are now under review with negative implications following the announcement that Catlin will be acquired by North American Casualty Group (NAC). This acquisition is expected to close in the second quarter of 2022, pending regulatory approval. The downgrade reflects the loss of support from its parent company, AXA S.A., as NAC's ratings are also on negative outlook.

Positive

• None.

Negative

• Downgrade of Catlin's FSR from A+ to A and ICR from aa- to a.
• Both ratings are under review with negative implications.
• Loss of implicit and explicit support from AXA S.A., which previously boosted Catlin's ratings.
• NAC's ratings also have a negative outlook.

OLDWICK, N.J.--(BUSINESS WIRE)-- AM Best has downgraded the Financial Strength Rating (FSR) to A (Excellent) from A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) to “a” (Excellent) from “aa-” (Superior) of Catlin Specialty Insurance Company (Catlin) (Wilmington, DE). In addition, AM Best has placed these Credit Ratings (ratings) under review with negative implications.

The rating actions follow the announcement that the Catlin is to be acquired by North American Casualty Group (NAC). Catlin is to be sold as a shell, while being licensed to write excess and surplus business in all states except Oklahoma. This transaction is anticipated to close in second-quarter 2022, pending regulatory approval, at which time AM Best expects that Catlin will be added to NAC’s existing pooling agreement.

NAC’s FSR of A (Excellent) and Long-Term ICRs of “a” (Excellent) are currently have a negative outlook. Prior to the announced sale, Catlin’s ratings benefited from implicit and explicit support from its parent organization, AXA S.A. The ratings downgrades reflect the removal of this benefit.

The negative implications reflect that NAC’s ratings are currently on negative outlook, as previously referenced. Catlin’s ratings will remain under review pending the completion of the acquisition and AM Best’s assessment of post-acquisition rating fundamentals.

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

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 London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

View source version on businesswire.com: https://www.businesswire.com/news/home/20220303005654/en/

Dan Hofmeister, CFA, FRM, CAIA, CPCU

Senior Financial Analyst

+1 908 439 2200, ext. 5385

dan.hofmeister@ambest.com

Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

christopher.sharkey@ambest.com

Gregory Dickerson

Associate Director

+1 908 439 2200, ext. 5161

gregory.dickerson@ambest.com

Jim Peavy

Director, Communications

+1 908 439 2200, ext. 5644

james.peavy@ambest.com

Source: AM Best

FAQ

What ratings did AM Best assign to Catlin Specialty Insurance Company?

AM Best downgraded Catlin Specialty Insurance Company's FSR to A (Excellent) and ICR to a (Excellent).

Why were Catlin's ratings downgraded?

Catlin's ratings were downgraded due to the anticipated acquisition by North American Casualty Group and the loss of support from its parent company, AXA S.A.

What is the current outlook for Catlin's ratings?

Catlin's ratings are currently under review with negative implications.

When is Catlin's acquisition by NAC expected to close?

The acquisition is anticipated to close in the second quarter of 2022, pending regulatory approval.

How does the acquisition affect Catlin's financial ratings?

The acquisition removes the support Catlin received from AXA, leading to a downgrade in its ratings, while NAC's ratings also hold a negative outlook.