Canadian Underwriter

Olympus rating excellent; Royal place on watch

October 24, 2002   by Canadian Underwriter

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New Bermuda venture Olympus Reinsurance Co. Ltd. has been assigned an initial rating of A- (excellent) by rating agency A.M. Best.
The company was amongst those formed in the wake of September 11, starting business in December 2001, with $500 capitalization from a private equity fund.
Olympus operates in Canada through a quota share agreement with Folksamerica Re covering property excess of loss business. It also offers coverage in the U.S. and Latin America, as well as reinsurance advisory services. The company is also looking at other short-tail lines of business in different countries as part of its plan to diversify risk by geography, cedant and exposure, class and attachment level.
“We intend to remain a smaller, tightly-managed venture,” says president Sheila Nicoll. “Our focus is on conservative underwriting, fixed income investing and low overhead.”
The news was not so positive for U.K. based Royal & SunAlliance and its subsidiaries, including its Canadian operations. Standard & Poor’s has place the A-rated company on CreditWatch with negative implications.
The company has not been downgraded at this point, but the watch implies concerns over capitalization.
On August 20, 2002, Standard & Poor’s stated that it expected the group to strengthen its capital adequacy and deliver an improvement in earnings during the second half of 2002. These expectations are key requirements for maintaining the ratings at their current level,” says S&P credit analyst Mark Button.
S&P will now wait for word on Royal’s third quarter earnings an capital levels before updating the watch.

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