A.M. Best Co. has affirmed the financial strength rating of A (Excellent) and issuer credit ratings (ICR) of “a” of Wind River Reinsurance Company, Ltd. (Wind River Re) (Hamilton, Bermuda) and its U.S. subsidiaries. Concurrently, A.M. Best has affirmed the ICR of “bbb” of the ultimate parent holding company of Wind River Re, Global Indemnity plc (Global Indemnity) (Dublin, Ireland) [NASDAQ: GBLI]. The outlook for all ratings is stable.

At the same time, A.M. Best has withdrawn the ICR of “bbb” and debt ratings of the intermediate parent holding company, United America Indemnity, Ltd. (UAI) (George Town, Cayman Islands) due to the transfer of its universal shelf registration to Global Indemnity. Accordingly, A.M. Best has assigned indicative ratings of “bbb” on senior unsecured debt, “bbb-” on subordinated unsecured debt and “bb+” on preferred stock to Global Indemnity’s shelf registration. The outlook for these ratings is stable. These indicative ratings and outlook are consistent with the previous ratings of the UAI shelf registration.

These ratings take into account Global Indemnity’s solid capitalization, strong historical operating performance and its diversified portfolio of specialty products provided on both an admitted and non-admitted basis by Wind River Re and its U.S. subsidiaries. The U.S. subsidiaries operate under a single pooling agreement, whereby they pool their premiums and liabilities and cede 50% of their combined net retained liabilities to Wind River Re. Wind River Re also continues to maintain a book of unaffiliated, third-party reinsurance to complement the affiliated business.

These positive rating factors are partially offset by the recent deterioration in the company’s combined ratio due to severe weather losses in both its insurance and reinsurance operations. In addition, losses in the professional and general liability lines have adversely impacted operating results. While A.M. Best does not believe that recent results are indicative of a trend, it will continue to monitor the results of Global Indemnity. Of special importance will be the company’s ability to successfully execute on the business plans implemented by its newly appointed Chief Executive Officer (CEO), Cynthia Valko. Ms. Valko, who has an extensive insurance background, became CEO of Global Indemnity on September 19, 2011.

Factors that may lead to a positive rating action include a sustained improvement in operating performance and the company’s ability to meet or best projections. Factors that may lead to a negative rating action include a decline in risk-adjusted capitalization, a continuation of weak operating performance or deterioration in Global Indemnity’s reserves.

The FSR of A (Excellent) and ICRs of “a” have been affirmed for Wind River Reinsurance Company, Ltd. and its following subsidiaries:
  • Diamond State Insurance Company
  • Penn-America Insurance Company
  • Penn-Patriot Insurance Company
  • Penn-Star Insurance Company
  • United National Casualty Insurance Company
  • United National Insurance Company
  • United National Specialty Insurance Company

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition , which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “A.M. Best’s Ratings & the Treatment of Debt”; “Assessing Country Risk”; “Catastrophe Analysis in A.M. Best’s Ratings”; “Equity Credit on Hybrid Securities”; “Rating Members of Insurance Groups”; “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “Understanding Universal BCAR.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.

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