A.M. Best Co. has affirmed the financial strength rating of A+
(Superior) and issuer credit rating of “aa” of Seaworthy Insurance
Company (Seaworthy) (Annapolis, MD).The outlook for both ratings is
The ratings reflect Seaworthy’s supportive capitalization, favorable
underwriting results indicative of the inherent benefits and advantages
afforded by management’s specialty niche ocean marine expertise, as well
as the implicit and explicit financial support provided by its ultimate
parent, Berkshire Hathaway Inc. (Berkshire), (NYSE: BRK.A and
BRK.B) and a Berkshire subsidiary in the form of significant reinsurance
The reinsurance transactions include a loss portfolio transfer and quota
share agreements between Seaworthy and National Indemnity Company,
which acquired Seaworthy’s immediate parent, Boat America Corporation,
in August 2007. In addition to Berkshire’s track record of supporting
its member companies, these transactions demonstrate in effect the
explicit commitment provided by Berkshire and from which Seaworthy
receives rating enhancement.
These positive rating factors are partially offset by Seaworthy’s
product and revenue concentration, its very low investment returns
driven by its highly liquid, low credit risk asset portfolio comprised
mostly of cash, and the risks associated with expansion beyond the
business generated from members of the Boat Owners Association of The
United States. Despite these factors, the outlook is based upon
Seaworthy’s enhanced financial flexibility, strong balance sheet and
historic underwriting profitability.
Negative rating actions could occur if Seaworthy’s capitalization and/or
operating performance falls markedly short of A.M. Best’s expectations,
as a result of significant deterioration in loss trends and any sudden
change in parental commitment. Given Seaworthy’s limited business scope,
the ratings also are subject to any sudden shifts within its core market
niche, a drastic change in its business profile and any sudden and
unforeseen disruption in its distribution.
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”; “Catastrophe
Analysis in A.M. Best Ratings”; and “Rating Members of Insurance
Groups.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
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