A.M. Best Revises Outlook to Stable for Ratings of Atradius Trade Credit Insurance, Inc. and Its Subsidiary

A.M. Best Co. has revised the outlook to stable from negative and affirmed the financial strength rating of A- (Excellent) and issuer credit ratings of “a-” of Atradius Trade Credit Insurance, Inc. (ATCI) (Hunt Valley, MD) and its wholly owned and 100% reinsured subsidiary, Atradius Trade Credit Insurance Company, New Jersey (West Trenton, NJ).

The ratings reflect ATCI’s excellent capitalization, dynamic risk reduction efforts, which have improved loss ratio performance, solid market position in the trade credit industry and strong pre-crisis operating profitability. The ratings also reflect the substantial reinsurance protection and access to a global credit analysis infrastructure afforded the group by its parent, Grupo Catalana Occidente, S.A. (GCO) and its affiliates, including the intermediate parent, Atradius N.V.

These positive rating factors are partially offset by ATCI’s high underwriting expense ratio, the variability in its underwriting results driven by the group’s expense burden and the execution risk associated with profitably growing into its existing infrastructure.

While management has implemented a number of initiatives that mitigated the potential for loss during the recent economic downturn, it may take some time to achieve the scale required to profitably sustain the cost of the current reinsurance program. Nevertheless, the outlook reflects ATCI’s improved operating earnings, and A.M. Best’s expectations that profitable earnings over the near term will result in additional surplus growth.

Negative rating pressure could occur should ATCI’s underwriting results significantly weaken to the point that operating performance falls below A.M. Best’s expectations, or the financial condition of GCO weakens.

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. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; and “A.M. Best’s Ratings & the Treatment of Debt.” Best’s Credit Rating Methodology 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.

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