A.M. Best has downgraded the Long-Term Issuer Credit Rating (Long-Term ICR) of Maiden Holdings and its downstream, intermediate holding company, Maiden Holdings North America from bbb to bbb-.
The firm’s associated Long-Term Issue Credit Ratings (Long-Term IRs) received the same rating downgrade.
In addition, A.M. Best has downgraded the Financial Strength Rating to A- from A and the Long-Term ICRs to a- from a for MHLD’s insurance operating subsidiaries, Maiden Reinsurance and Maiden Reinsurance North America.
A.M. Best said that for these lines of business the credit rating outlooks have been revised to negative from stable.
These ratings reflect a “very strong” balance sheet strength, however, the rating downgrades came after Maiden’s AmTrust Reinsurance business segment surplus declined in 2017 due to poor results which led to balance sheet deterioration.
“The negative outlooks reflect a decline in balance sheet strength and the potential that continuation of recent underwriting and operating trends could lead to negative action on the rating,” said A.M. Best.
In 2016, loss reserve development for Maiden was “adverse” driven by losses in the firm’s diversified reinsurance segment, mostly in the commercial auto line.
Thus, A.M. Best explained; “Maiden’s AmTrust reinsurance business historically performed at a favorable combined ratio, but was impacted by adverse development of prior years’ loss reserves during 2017.”
A.M. Best’s negative outlook makes positive rating action unlikely over the next 24 to 36 months, however, this could change in the medium to long term if underwriting results return to historical levels with no significant further adverse development of loss reserves.
