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S&P Rates RSUI Indemnity Co At A-
NEW YORK (Standard & Poor's) June 10, 2004--Standard & Poor's Ratings Services said today that it assigned its 'A-' counterparty credit and financial strength ratings to RSUI Indemnity Company and its 100%-owned pool member, Landmark American Insurance Co.
Standard & Poor's also said that the outlook on both these companies is stable.
"The ratings on the companies (collectively referred to as RSUI) reflect the group's good competitive position in its specialty lines, very strong operating results, and extremely strong capital adequacy," noted Standard & Poor's credit analyst Steven Ader. Somewhat offsetting these positive factors are the group's significant growth and concentration in high-severity property exposures, high reliance on reinsurance, and potential management distraction resulting from additional corporate responsibilities inherent in a licensed insurance company structure.
Standard & Poor's expects earnings, before any material catastrophic event, to remain very strong. Standard & Poor's expects that the increased competitiveness on the specialty market will result in premiums remaining stable for the next few years as management continues its focus on proactively addressing market conditions in its specialty operations.
Standard & Poor's believes that RSUI enjoys a good competitive position in its specialty lines business, as demonstrated by direct written premiums of $1.3 billion in 2003 and a combined ratio that is markedly better than industry averages. RSUI's competitive position is supported by management's historical success as an underwriter of specialty property/casualty insurance products with a focus on relatively low-frequency, high-severity commercial property exposures. Such exposures were 58% of the total book in calendar-year 2003. The group's other specialty business includes umbrella and excess (17%), general liability (12%), directors and officers (7%), and, most recently, professional liability (5%). However given the growing number of entrants into this segment, Standard & Poor's believes RSUI's competitive position could be pressured as a result of its reliance on its independent wholesale distribution channel versus some of its competitors' multifaceted distribution channels that include captive and retail agents.
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