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I AGREE
04 Dec 2009
Aproximately $600 million of securities affected
New York, December 04, 2009 -- Moody's has placed the A2 insurance financial strength ratings of
the OneBeacon Insurance Group inter-company pool members (OneBeacon
) and the Baa2 senior debt rating of its intermediate holding company,
OneBeacon U.S. Holdings, Inc. (OneBeacon U.S.),
under review for possible downgrade. The rating action follows
the company's announcement that it has sold --via
a renewal rights agreement--its non-specialty commercial
lines business (totaling $490 million of direct premiums) to The
Hanover Insurance Group. The transaction represents a strategic
shift in OneBeacon's business profile towards that of a specialty
insurance company, with nearly two-thirds of pro-forma
premium volume derived from specialty lines and the balance in personal
lines.
Moody's Senior Credit Officer Pano Karambelas said: "The
review for downgrade will focus on the company's shifting business
profile and its competitive position relative to other specialty lines
writers, as well as its prospective profitability and future capital
structure." The rating agency's review will also consider
possible changes to the company's catastrophe exposure, reinsurance
programs, and reserve position. Moody's commented that
should a downgrade occur, it is not expected to be more than one
notch.
OneBeacon's past business profile featured a balanced mix of specialty,
commercial, and personal lines portfolios which--over
the long-term--was expected to provide an earnings
stream with potential diversification benefits. "As a focused
specialty writer," Mr. Karambelas added, "OneBeacon
will face direct competition with a number of larger, well-entrenched
commercial specialty writers with strong financial performance."
Although OneBeacon's specialty portfolio has posted strong profit
margins over the last few years, pricing within the property &
casualty industry continues to be under pressure, particularly with
the rebound of industry capital since year-end 2008.
The following ratings were placed under review for possible downgrade:
OneBeacon Insurance Group Pool Members, insurance financial strength
at A2:
Altantic Specialty Insurance Company
AutoOne Insurance Company
AutoOne Select Insurance Company
The Camden Fire Insurance Association
Essentia Insurance Company
Homeland Insurance Company of New York
Massachusetts Homeland Insurance Company
The Northern Assurance Company of America
OneBeacon America Insurance Company
OneBeacon Insurance Company
OneBeacon Lloyd's of Texas
OneBeacon Midwest Insurance Company
Pennsylvania General Insurance Company
Potomac Insurance Company
York Insurance Company of Maine
Shelf Ratings of OneBeacon U.S. Holdings, Inc:
OneBeacon U.S. Holdings, Inc. --
provisional senior unsecured debt at (P)Baa2; provisional subordinated
debt at (P)Baa3; provisional junior subordinated debt at (P)Baa3;
provisional preferred stock at (P)Ba1.
OneBeacon U.S. Holdings Trust I, II, III --
provisional trust preferred securities at (P)Baa3.
OneBeacon Insurance Group, Ltd. (NYSE: OB) is a Bermuda-domiciled
insurance holding company whose property and casualty insurance subsidiaries
provide a range of specialty insurance products as well as a variety of
commercial and personal insurance products in the U.S. OneBeacon
U.S. is an indirect wholly-owned subsidiary of OneBeacon
Insurance Group, Ltd., which, in turn,
in an indirect 75%-owned subsidiary of White Mountains Insurance
Group, Ltd. (NYSE: WTM), with the remaining 25%
shares publicly owned. Principal and interest on OneBeacon U.S.'s
outstanding senior notes are guaranteed by WTM. For the first nine
months of 2009, the company reported total premiums earned of approximately
$1.5 billion and net income of $270 million.
GAAP shareholders' equity was $1.4 billion as of September
30, 2009.
The last rating action on OneBeacon was on August 3, 2009 when Moody's
affirmed OneBeacons' ratings with a stable outlook and assigned
provisional ratings to OneBeacon U.S. Holdings, Inc.'s
shelf registration.
The principal methodology used in rating OneBeacon is "Moody's Global
Rating Methodology for Property and Casualty Insurers" which can
be found at www.moodys.com in the Rating Methodologies sub-directory
under the Research & Ratings tab. Other methodologies and factors
that may have been considered in the process of rating this issuer can
also be found in the Rating Methodologies sub-directory on Moody's
website.
Moody's insurance financial strength ratings are opinions of the ability
of insurance companies to pay punctually senior policyholder claims and
obligations.
Visit Moody's website at www.moodys/insurance.com for more
information.
New York
Pano Karambelas
VP - Senior Credit Officer
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
New York
Robert Riegel
Managing Director
Financial Institutions Group
Moody's Investors Service
JOURNALISTS: 212-553-0376
SUBSCRIBERS: 212-553-1653
Moody's reviews OneBeacon for downgrade following renewal rights transaction
No Related Data.
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