A.M. Best Affirms Rating of White Mountains Insurance Group, Ltd., OneBeacon Insurance Group, Ltd. and Its Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and issuer credit ratings (ICR) of “a” of OneBeacon Insurance Company and its six pooled and four reinsured affiliates, collectively referred to as OneBeacon Insurance Group (OneBeacon).

Additionally, A.M. Best has assigned an FSR of A (Excellent) and an ICR of “a” to OBI National Insurance Company (OBIN) and Homeland Insurance Company of Delaware (HODE). OBIN and HODE are newly formed subsidiaries of OneBeacon Insurance Company and participate in a 100% quota share agreement. OBIN was established to write admitted business in Rhode Island and support the group’s workers’ compensation and other tiered business in certain states. HODE was established to write surplus lines in Pennsylvania, New York, Rhode Island and Delaware.

At the same time, A.M. Best has affirmed the ICRs of “bbb” and debt ratings of OneBeacon’s publicly traded parent, OneBeacon Insurance Group, Ltd. (OneBeacon Ltd.) (Hamilton, Bermuda) [NYSE: OB], and its intermediate holding company, OneBeacon U.S. Holdings, Inc. (OneBeacon U.S.).

Concurrently, A.M. Best has affirmed the ICR of “bbb” of the group’s ultimate parent, White Mountains Insurance Group, Ltd. (White Mountains) (Hamilton, Bermuda) [NYSE: WTM].

A.M. Best also has affirmed the FSR of B++ (Good) and ICR of “bbb+” of Potomac Insurance Company (Philadelphia, PA), which currently is in run off. The outlook for all the above ratings is stable. All companies are headquartered in Minnetonka, MN, except where specified. (See below for a detailed list of the companies and ratings.)

The affirmation of OneBeacon's ratings reflects its excellent level of risk-adjusted capitalization and strong earnings through its solid underwriting and operating performance. The ratings also consider the strong financial flexibility of OneBeacon U.S. and OneBeacon Ltd.

These positive rating factors are partially offset by the historical adverse development of the loss reserves of OneBeacon’s run-off business and by the risk inherent in pursuing a less-diversified business strategy than in previous years following the sale of OneBeacon’s personal lines and standard commercial lines businesses. A.M. Best’s concern with OneBeacon’s more focused strategy is significantly offset by the historical profitability of its specialty business.

While the ratings for the group are stable, future positive rating actions may result from its continued strong underwriting and operating performance. However, negative rating actions could result if the group’s underwriting and operating performance falls markedly short of A.M. Best’s expectations, along with a weakening in its overall risk-adjusted capitalization.

The affirmation of the ratings of OneBeacon Ltd., OneBeacon U.S. and White Mountains acknowledges the companies’ strong financial flexibility and the solid operating results generated through their operating subsidiaries.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for OneBeacon Insurance Company and its following affiliates:

  • Atlantic Specialty Insurance Company
  • The Camden Fire Insurance Association
  • The Employers' Fire Insurance Company
  • Essentia Insurance Company
  • Homeland Insurance Company of New York
  • The Northern Assurance Company of America
  • OneBeacon America Insurance Company
  • OneBeacon Midwest Insurance Company
  • Pennsylvania General Insurance Company
  • Traders & General Insurance Company

The following debt rating has been affirmed:

OneBeacon U.S. Holdings, Inc.—

-- “bbb” on $270 million 5.875% senior unsecured notes, due 2013

The following indicative ratings under the shelf registration have been affirmed:

OneBeacon U.S. Holdings, Inc. and OneBeacon Insurance Group, Ltd.—

-- “bbb” on senior unsecured debt

-- “bbb-” on subordinate debt

-- “bb+” on preferred stock

OneBeacon U.S. Holdings Trust I, II, III—

-- “bb+” on preferred stock

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. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Catastrophe Analysis in A.M. Best’s Ratings”; “Insurance Holding Company and Debt Ratings”; “The Treatment of Terrorism Risk in the Rating Evaluation”; “Understanding BCAR for Property/Casualty Insurers”; and “Rating Members of Insurance Groups.” 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 RESERVED.

A.M. Best Company
Brian O’Larte, 908-439-2200, ext. 5138
Senior Financial Analyst
Rachelle Morrow, 908-439-2200, ext. 5378
Senior Manager, Public Relations
Jennifer Marshall, 908-439-2200, ext. 5327
Managing Senior Financial Analyst
Jim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations

Source: A.M. Best Company