AM Best has downgraded the financial strength rating of Endurance Specialty Insurance and its operating affiliates to A- (excellent) from A (excellent) and the issuer credit rating (ICR) to “a-” from “a”.
At the same time, AM Best has downgraded the ICR for Endurance Specialty Holdings to “bbb-” from “bbb” and downgraded all existing debt ratings.
All ratings have been removed from under review with negative implications and assigned a stable outlook.
AM Best said the rating action reflects the fact that Endurance's share of Hurricane Katrina losses was outside of AM Best's original expectations for a diversified multi-line reinsurance company.
The ratings agency said Endurance's business mix profile, which includes property, casualty and specialty lines of business, was expected to have more limited correlation and produce less overall volatility.
However, it added that the current rating continues to reflect Endurance's strong market profile, which enabled it to re-capitalise with a combination of equity and debt offerings immediately following Hurricane Katrina.
AM Best said the company's recently completed capital raising activities bring Endurance's risk-based capital to an appropriate level for its new rating and outlook.
Following detailed discussions with the company's management, AM Best said it believes that prudent adjustments to the company's underwriting strategy are now being implemented to better manage the potential accumulation of losses from a single large catastrophic event.
