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 Eastern Re Ltd. SPC (Eastern
Re) (Grand Cayman, Cayman Islands). The outlook for both ratings is
stable.
The ratings recognize Eastern Re’s strategic affiliation with its
holding company, Eastern Insurance Holdings, Inc. (EIHI) [NASDAQ:
EIHI] and the member companies that comprise the Eastern Alliance
Insurance Group(EAIG), its historically profitable operating
results as well as its sound stand-alone capitalization.
These positive rating factors are partially offset by Eastern Re’s
exclusive reliance on EIHI and EAIG for the production of all its
business, as well as the mono-line orientation of Eastern Re, which
primarily acts as a workers’ compensation reinsurer. All named companies
are domiciled in Lancaster, PA, unless otherwise specified.
Eastern Re is a segregated portfolio company or cell captive, whose
general cell is a wholly owned subsidiary of EIHI, which also indirectly
owns EAIG, and all these workers’ compensation insurance companies
produce business through regional agents. These insurance companies
provide both fronting capabilities and reinsurance protection to Eastern
Re. Eastern Re also utilizes the expertise of Employers Alliance Inc.,
an insurance services provider and member of EAIG that acts as the third
party administrator and provides services for all of the cells of
Eastern Re.
Eastern Re issues preferred shares to its cell owners, which are agent
or group captives that purchase workers’ compensation coverage from
EIHI. These agent and group captives participate in the profits and
losses of the cell for which they are the owners. This dynamic provides
added incentive to the agent or group captive to prevent adverse
selection for the business being assumed by Eastern Re.
Factors that could result in either an upgrading or a downgrading of
Eastern Re’s ratings include a change in the overall risk profile of
EAIG (more or less risky) as well as a change in the consolidated
capital strength of the segregated cells.
A.M. Best remains the leading rating agency of alternative risk transfer
entities, with more than 200 such vehicles rated in the United States
and throughout the world. For current Best’s Credit Ratings and
independent data on the captive and alternative risk transfer insurance
market, please visit www.ambest.com/captive.
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.
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 © 2013 by A.M. Best Company, Inc.ALL RIGHTS
RESERVED.
A.M. Best Co.
Alexander Sarfo
Senior
Financial Analyst
(908) 439-2200, ext. 5779
alexander.sarfo@ambest.com
or
Steven
Chirico, CPA
Assistant Vice President
(908)
439-2200, ext. 5087
steven.chirico@ambest.com
or
Rachelle
Morrow
Senior Manager, Public Relations
(908)
439-2200, ext. 5378
rachelle.morrow@ambest.com
or
Jim
Peavy
Assistant Vice President, Public Relations
(908)
439-2200, ext. 5644
james.peavy@ambest.com
Source: A.M. Best Co.