A.M. Best Affirms Ratings of Eastern Re Ltd. SPC
OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit rating of "a" of Eastern Re Ltd. SPC (Eastern Re) (Grand Cayman, Cayman Islands). The outlook for both ratings is stable.
The ratings recognize Eastern Re's strategic affiliation with its holding company, Eastern Insurance Holdings, Inc. (EIHI) [NASDAQ: EIHI] and the member companies that comprise the Eastern Alliance Insurance Group (EAIG), its historically profitable operating results as well as its sound stand-alone capitalization.
These positive rating factors are partially offset by Eastern Re's exclusive reliance on EIHI and EAIG for the production of all its business, as well as the mono-line orientation of Eastern Re, which primarily acts as a workers' compensation reinsurer. All named companies are domiciled in Lancaster, PA, unless otherwise specified.
Eastern Re is a segregated portfolio company or cell captive, whose general cell is a wholly owned subsidiary of EIHI, which also indirectly owns EAIG, and all these workers' compensation insurance companies produce business through regional agents. These insurance companies provide both fronting capabilities and reinsurance protection to Eastern Re. Eastern Re also utilizes the expertise of Employers Alliance Inc., an insurance services provider and member of EAIG that acts as the third party administrator and provides services for all of the cells of Eastern Re.
Eastern Re issues preferred shares to its cell owners, which are agent or group captives that purchase workers' compensation coverage from EIHI. These agent and group captives participate in the profits and losses of the cell for which they are the owners. This dynamic provides added incentive to the agent or group captive to prevent adverse selection for the business being assumed by Eastern Re.
Factors that could result in either an upgrading or a downgrading of Eastern Re's ratings include a change in the overall risk profile of EAIG (more or less risky) as well as a change in the consolidated capital strength of the segregated cells.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best's Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
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 © 2013 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
A.M. Best Co.
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