Best affirms "A-" rating and assigns stable outlook

AM Best has affirmed the financial strength rating of “A-” (Excellent) and the issuer credit ratings of “a-” of Max Bermuda and its affiliated companies.

Concurrently, AM Best has affirmed the ICR of “bbb-” of Max Capital Group and the debt rating of “bbb-”of $100m 7.20% senior notes due April 2017 for Max USA.

AM Best also has affirmed the existing shelf ratings of both companies. The outlook for all ratings is stable.

These ratings reflect Max’s diversified book of traditional property/casualty products, along with its life/annuity business, solid operating results and effective risk management controls.

The company’s book of business, which predominately contains long-tail casualty lines, is fully supported by an excellent level of risk-based capitalisation.

Since inception, Max’s market strategy has focused on effectively entering more attractive traditional property/casualty lines of business following major events. In early 2007 MXGL continued its expansion with the acquisition of Max Specialty Insurance Company, a US based excess and surplus lines writer providing traditional property/casualty products.

This acquisition broadens Max’s market distribution with access to a select group of U.S. national brokers and regional managing agents.

Partially offsetting these rating strengths is the increased competition in Max’s market segments as the pricing environment continues to soften, particularly in the US excess and surplus lines market where several other Bermuda based companies have announced expansion plans.

Furthermore, AM Best believes that Max’s alternative investment portfolio introduces an elevated risk factor and potential variability to the company’s net results. However, this elevated risk factor is included in Max’s risk-based capital model.