|[June 13, 2014]
A.M. Best Revises Outlook to Stable for ProSight Global Holdings Limited and Its Subsidiaries
OLDWICK, N.J. --(Business Wire)--
A.M. Best has revised the outlook to stable from negative and
affirmed the issuer credit rating (ICR) of "bbb" of ProSight Global
Holdings Limited (ProSight Global Holdings) as well as the financial
strength rating of A (Excellent) and the ICRs of "a" of New York
Marine and General Insurance Company and its majority-owned
subsidiary, Gotham Insurance Company and wholly-owned subsidiary, Southwest
Marine & General Insurance Company (collectively referred to as ProSight
Concurrently, A.M. Best has revised the outlook to stable from negative
and affirmed the ICR of "bbb" and the debt rating of "bbb" on the $140
million 7.5% senior unsecured notes due November 2020 of ProSight
Global, Inc. (ProSight Global). These notes are guaranteed by
ProSight Global Holdings. Additionally, A.M. Best has withdrawn the ICR
of "bbb" and the debt rating of "bbb" on the $100 million 6.5% senior
unsecured bonds issued by ProSight Specialty Insurance Group, Inc.
(ProSight) since the debt has been redeemed. All companies are
headquartered in Morristown, NJ.
The revised outlook reflects the organization's improved operating
performance in 2012, 2013 and through the first quarter of 2014,
following operating losses in 2010 and 2011. These losses reflected the
intentional run-off of less profitable programs coupled with increased
exenditures related to staffing, real estate and information technology
investments, subsequent to ProSight's acquisition of the company.
The affirmation of the ratings acknowledges ProSight Specialty Group's
adequate level of risk-adjusted capitalization, generally favorable
operating earnings and strong market niche position. The ratings also
recognize the strength of the management team that was brought to the
group with the acquisition as well as the progress the team has made to
date in repositioning the business and improving performance.
Partially offsetting these positive rating factors are ProSight
Specialty Group's elevated expense ratio, as the company completes the
build out of its global operating platform, the aforementioned operating
losses in the earliest years of the five-year period, limited organic
capital generation in recent years and the risks associated with the
growth and maturation of new business.
Financial leverage at ProSight Global Holdings supports its current
rating level, although coverage ratios have varied over the last few
years. Adequate resources are available at ProSight Global Holdings to
cover the required interest payments.
Negative rating actions may occur if ProSight Specialty Group has a
significant decline in its underwriting profitability and/or
deterioration in its level of risk-adjusted capitalization as measured
by Best's Capital Adequacy Ratio. Positive rating actions may occur
after ProSight Specialty Group demonstrates earnings sustainability over
several years, in line with A.M. Best's expectations.
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.
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