|[November 21, 2012]
A.M. Best Affirms Ratings of Aurigen Reinsurance Company and Aurigen Reinsurance Limited
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 Aurigen Reinsurance
Company (Toronto, ON (News - Alert)) and Aurigen Reinsurance Limited
(Hamilton, Bermuda) (collectively known as Aurigen). The outlook for the
ratings is stable.
The ratings of Aurigen are based upon its excellent risk-adjusted
capital position and modest consolidated earnings. While the company is
still considered in its early stage of operating history, it is focused
on the Canadian life reinsurance marketplace with plans to expand into
the United States market.
During the past year, Aurigen was able to grow its revenues, maintain a
robust capital position, continue to prudently gain traction in a
concentrated market, and now has reinsurance treaties in place with the
largest accounts in Canada. A.M. Best views Aurigen's business plan as
opportunistic and believes it may be difficult for Aurigen to grow its
market share quickly in the established and concentrated Canadian market.
A.M. Best maintains the position that continued uncertainties exist with
respec to the successful longer term execution of Aurigen's business
plan, but these uncertainties have lessened over the past year,
reflecting a successful embedded value securitization demonstrating
additional financial flexibility and new business volume. While
the company's new business activities during the early years of its
operation were below A.M. Best's expectations based on Aurigen's
original business plan, A.M. Best believes that the company has recently
demonstrated consistent new business growth and strong capital to
achieve its current objectives. If growth plans outpace the company's
business plan, Aurigen may potentially need to reach out to the capital
markets in some way to facilitate growth objectives through an initial
public offering, or possibly some other method, to raise capital.
A positive rating action is unlikely over the near to medium term. A
negative rating action could result if the planned growth strategies
result in material negative changes in the company's capitalization,
operating performance, or unexpected negative changes in Aurigen's
business model develop.
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.
Founded in 1899, 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 © 2012 by A.M. Best Company, Inc. ALL RIGHTS
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