Alleghany & Units See Rating Action From A.M. Best

Alleghany Corporation’s (NYSE:Y) issuer credit ratings (ICR) have been upgraded to “a-” from “bbb+” by A.M. Best. Concurrently, the rating giant upgraded the financial strength rating (FSR) to A+ (Superior) from A (Excellent) and the ICR to “aa-“from “a+” of Transatlantic Reinsurance Company and its subsidiaries. Transatlantic is a subsidiary of Alleghany. The outlook is revised to stable from positive.

The ratings upgrade of Transatlantic Reinsurance came on the back of sturdy risk-adjusted capitalization, strong enterprise risk management, and stable operational performance as well as highly diversified book of business. Besides, the rating upgrade also reflects the recent transactions that have boosted Transatlantic Reinsurance’s business profile.

The credit rating giant anticipates Transatlantic Reinsurance to generate positive results, which will continue to support its ratings and be less volatile than its industry competitors over the course of full cycle.

At the same time, Alleghany’s affiliates, RSUI Indemnity Company and its reinsured subsidiaries had their FSR of A+ (Superior) and the ICRs of “aa-” affirmed by the rating agency. The outlook for each of these ratings remained stable.

Robust risk-adjusted capitalization and outstanding track record of high quality underwriting results, displaying industry outperformance, are reflected by the ratings affirmation of RSUI Indemnity and its subsidiaries.

Moreover, the rating giant affirmed the FSR of A (Excellent) and the ICRs of “a” of Capitol Indemnity and its affiliates, units of Alleghany. The outlook remained stable.

The ratings account for solid and sustained levels of risk-adjusted capitalization as well as Capitol Indemnity’s ongoing process of reorganizing books of business to generate more stable results.

Also, the FSR of A- (Excellent) and ICR of “a-” of Pacific Compensation Insurance Company, a subsidiary of Alleghany, were affirmed by A.M. Best, with a stable outlook for each. The rating agency expects that explicit support through intercompany reinsurance and direct capital support will be maintained or even exceeded if necessary. This formed the basis of Pacific Compensation’s ratings affirmation.

Rating affirmations or upgrades from credit rating agencies play an important role in retaining investor confidence on the stock as well as maintaining credit worthiness in the market. Hence, it is expected that such ratings will help the company write more business in the future.

Zacks Rank and Stocks to Consider

Currently, Alleghany Corporation carries a Zacks Rank #3 (Hold). Some better-ranked stocks from the same space include Allied World Assurance Company Holdings, AG (NYSE:AWH) , Argo Group International Holdings, Ltd. (NASDAQ:AGII) and National Interstate Corporation (NASDAQ:NATL) . Each of these stocks sports a Zacks Rank #1 (Strong Buy).

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