Post by Sapphire Capital on Jul 27, 2008 4:37:21 GMT 4
Jul 25, 2008
Fitch Ratings has revised the Rating Outlook on Imagine Insurance Company Limited and Imagine International Reinsurance Limited (collectively, Imagine) to Negative from Stable. Fitch currently rates both with an insurer financial strength (IFS) rating of 'A-'.
The revised Outlook reflects Fitch's concerns about the effect on Imagine's competitive positioning and operating profile from the organization's pending sale of its Imagine Group (UK) Limited (Imagine UK) subsidiary. Yesterday, Max Capital Group Ltd. (Max Capital) announced that it had entered into a definitive agreement to purchase Imagine UK from Imagine in exchange for a roughly $22 million cash consideration.
Imagine UK's key assets include three Lloyds underwriting syndicates. In recent years, Fitch had viewed these syndicates, which provided access to a wide variety of business lines, as an important part of Imagine's overall underwriting platform and business strategy. These syndicates also enabled Imagine to leverage Lloyds' insurer financial strength ratings, which are currently higher than Imagine's ratings. Fitch estimates that Imagine's Lloyds' syndicates generated roughly 30% of the company's gross premiums written.
Fitch believes that Imagine has changed portions of its business strategy and underwriting platforms several times since the company's inception in 2000. Although Fitch views these changes as reasonable responses to shifts in market opportunities, Fitch believes that they have made it difficult for Imagine to grow its franchise and business opportunities at a rate commensurate with many of its peers.
Fitch's expectation is that, going forward, Imagine will focus its underwriting efforts on specialty niche-oriented property/casualty and life and health businesses. However, uncertainty exists from a rating perspective as to whether Imagine's competitive positioning in those markets is strong enough to offset the loss of benefits derived from the company's Lloyd's platform.
Favorably, Fitch believes that Imagine's sale of its Lloyd's business will reduce the company's underwriting volatility, since roughly 35% of the Lloyd's business was derived from property/catastrophe reinsurance, which Fitch considers to be more volatile from an underwriting perspective than other portions of Imagine's book of business. Fitch expects the effect on Imagine's reported capital position from the sale of Imagine UK to be immaterial, and as a result, that the company's risk-adjusted capitalization will improve. Additionally, Fitch does not anticipate the company's shareholders seeking a return of capital as a result of the company's changing business mix.
Going forward, Imagine's ability to maintain a consistent business strategy and underwriting platform, demonstrate competitive advantages and market penetration in its chosen markets that are commensurate with those expected of a company at its rating level, and generate profitable business of sufficient scale, will be key factors in Fitch's rating analysis.
Imagine Insurance Company Limited (Imagine Insurance) is a Barbados-based insurance company that was formed in and began conducting business in late 2000. Imagine International is a Dublin-based, wholly owned subsidiary of Imagine Insurance. Imagine Insurance is the principal subsidiary of Imagine Group Holdings Limited (together, the Imagine Group), a Bermuda-based reinsurance holding company. The Imagine Group's principal investor is Canadian-domiciled Brookfield Asset Management (TSX: BAM.LV.A; NYSE: BAM).
Fitch maintains the following ratings, with a Negative Outlook:
Imagine Insurance Company Limited
Imagine International Reinsurance Limited
--IFS 'A-'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
SOURCE: Fitch Ratings
Fitch Ratings, Chicago Gretchen K. Roetzer, +1-
Fitch Ratings has revised the Rating Outlook on Imagine Insurance Company Limited and Imagine International Reinsurance Limited (collectively, Imagine) to Negative from Stable. Fitch currently rates both with an insurer financial strength (IFS) rating of 'A-'.
The revised Outlook reflects Fitch's concerns about the effect on Imagine's competitive positioning and operating profile from the organization's pending sale of its Imagine Group (UK) Limited (Imagine UK) subsidiary. Yesterday, Max Capital Group Ltd. (Max Capital) announced that it had entered into a definitive agreement to purchase Imagine UK from Imagine in exchange for a roughly $22 million cash consideration.
Imagine UK's key assets include three Lloyds underwriting syndicates. In recent years, Fitch had viewed these syndicates, which provided access to a wide variety of business lines, as an important part of Imagine's overall underwriting platform and business strategy. These syndicates also enabled Imagine to leverage Lloyds' insurer financial strength ratings, which are currently higher than Imagine's ratings. Fitch estimates that Imagine's Lloyds' syndicates generated roughly 30% of the company's gross premiums written.
Fitch believes that Imagine has changed portions of its business strategy and underwriting platforms several times since the company's inception in 2000. Although Fitch views these changes as reasonable responses to shifts in market opportunities, Fitch believes that they have made it difficult for Imagine to grow its franchise and business opportunities at a rate commensurate with many of its peers.
Fitch's expectation is that, going forward, Imagine will focus its underwriting efforts on specialty niche-oriented property/casualty and life and health businesses. However, uncertainty exists from a rating perspective as to whether Imagine's competitive positioning in those markets is strong enough to offset the loss of benefits derived from the company's Lloyd's platform.
Favorably, Fitch believes that Imagine's sale of its Lloyd's business will reduce the company's underwriting volatility, since roughly 35% of the Lloyd's business was derived from property/catastrophe reinsurance, which Fitch considers to be more volatile from an underwriting perspective than other portions of Imagine's book of business. Fitch expects the effect on Imagine's reported capital position from the sale of Imagine UK to be immaterial, and as a result, that the company's risk-adjusted capitalization will improve. Additionally, Fitch does not anticipate the company's shareholders seeking a return of capital as a result of the company's changing business mix.
Going forward, Imagine's ability to maintain a consistent business strategy and underwriting platform, demonstrate competitive advantages and market penetration in its chosen markets that are commensurate with those expected of a company at its rating level, and generate profitable business of sufficient scale, will be key factors in Fitch's rating analysis.
Imagine Insurance Company Limited (Imagine Insurance) is a Barbados-based insurance company that was formed in and began conducting business in late 2000. Imagine International is a Dublin-based, wholly owned subsidiary of Imagine Insurance. Imagine Insurance is the principal subsidiary of Imagine Group Holdings Limited (together, the Imagine Group), a Bermuda-based reinsurance holding company. The Imagine Group's principal investor is Canadian-domiciled Brookfield Asset Management (TSX: BAM.LV.A; NYSE: BAM).
Fitch maintains the following ratings, with a Negative Outlook:
Imagine Insurance Company Limited
Imagine International Reinsurance Limited
--IFS 'A-'.
Fitch's rating definitions and the terms of use of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures are also available from the 'Code of Conduct' section of this site.
SOURCE: Fitch Ratings
Fitch Ratings, Chicago Gretchen K. Roetzer, +1-