Allied World Assurance Company Ltd. is back in A.M. Best’s good graces.

The insurer and its divisions have been removed from their status as “under review with negative implications.” Also, A.M. Best affirmed Allied World’s financial strength rating of “A” (Excellent) and the long-term issuer credit ratings of “a+.”

Why the change? A.M. Best said Allied World’s ratings come down to a strong balance sheet, as well as its financial security in light of Fairfax Financial Holdings Ltd.’s Q3 acquisition of Allied World.

“Fairfax maintains financial flexibility, large levels of cash and marketable securities, and a track record of supporting its subsidiaries,” A.M. Best said.

While Allied World still faces some challenges due to the natural catastrophe onslaught in late 2017, A.M. Best said it expects Allied World to show continued resiliency.

“Despite relatively large losses reported from hurricanes and wildfires that struck the United States and Canada during the third quarter of 2017, the company’s net underwriting loss did not exceed its catastrophe risk tolerance level,” A.M. Best said.

A.M. Best added, however, that it expects the insurer’s underwriting performance “to be challenged to remain in line with its historical performance due to competitive pressure on its direct casualty business—it’s largest business segment, less favorable reserve development recognized over the past few years, and the expectation of more normalized property-catastrophe losses.”

A.M. Best also said that, “despite these challenges, Allied World remains well positioned, with a diversified portfolio of property/casualty insurance and reinsurance lines of business.”

Topics AM Best