S&P Global Ratings announced an upgrade of its financial strength ratings for Allegheny’s RSUI companies to “A+” on Wednesday, citing the excess and surplus lines operations’ “core” status to the group as a reason for the move.
The upgrade from “A” to “A+” applies to the insurance operating companies RSUI Indemnity Co., Landmark American Insurance Co. and Covington Specialty Insurance Co. (collectively RSUI).
The ratings outlook is stable, reflecting S&P’s opinion that Alleghany Corp.’s insurance and reinsurance operations will maintain strong competitive positions in their respective markets, the rating agency said in an announcement.
RSUI’s premium and capital levels are each almost one-fifth of the totals for Alleghany Corp., S&P said, justifying the “core” status determination. According to S&P, RSUI’s book represented 19 percent of Alleghany Corp.’s consolidated 2017 $5.7 billion gross premiums written.
“RSUI has also contributed materially to the group’s bottom line and is integral to its current identity and future strategy,” the S&P announcement said. Noting that RSUI has been under the Alleghany umbrella for 14 years, S&P said that RSUI upstreamed some $1.1 billion in dividends to Alleghany over that time frame.
While RSUI relies heavily on reinsurance to manage underwriting risks (with reinsurance utilization averaging about 26 percent during the past five years by S&P’s estimate), S&P believes that Alleghany would step in to provide capital and reinsurance support at times when reinsurance capacity tightens.
Source: S&P Global