A.M. Best Affirms Ratings of Clarendon Insurance Group and Its Members

2008-06-24 23:52:13 -

www.ambest.com - A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Clarendon Insurance Group (Clarendon) (Wilmington, DE) and its members. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)

The ratings assume an orderly administration of Clarendon's outstanding liabilities on its discontinued business, while also reflecting the projected cash flows and capital supporting these obligations. The ratings also reflect the continued explicit support provided by Clarendon's ultimate parent, Hannover Rueckversicherung AG (Hannover Re) (Germany), as evidenced by the reinsurance cover that went into effect on July 1, 2005, coinciding with an organizational restructuring.

These positive rating factors are offset by the challenges associated with reinsurance collectability and the potential for additional adverse prior year loss reserve development. Based on pro forma financials, the rating outlook recognizes A.M. Best's expectation that Clarendon's liabilities will be satisfied. Concerns related to reinsurance are somewhat mitigated by the excellent credit quality of the group's reinsurers and the considerable collateral secured relative to the reinsurance recoverables. Despite the credit quality of the reinsurers, Clarendon continues to have considerable exposure to the risk of reinsurance disputes.

The FSR of A- (Excellent) and ICRs of "a-" have been affirmed for Clarendon Insurance Group and its following members:

-- Clarendon National Insurance Company

-- Clarendon America Insurance Company

-- Clarendon Select Insurance Company

-- Harbor Specialty Insurance Company

For Best's Ratings, an overview of the rating process and rating methodologies, please visit www.ambest.com/ratings.

Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers. For more information, visit www.ambest.com.

A.M. Best Company
Analysts
David S. Blades, CPCU, 908-439-2200, ext. 5422
david.blades@ambest.com
or
Joseph Roethel, 908-439-2200, ext. 5630
joseph.roethel@ambest.com
or
Public Relations
Jim Peavy, 908-439-2200, ext. 5644
james.peavy@ambest.com
or
Rachelle Morrow, 908-439-2200, ext. 5378
rachelle.morrow@ambest.com