S&P’s affirms Alea’s ‘BBB’ rating

Standard & Poor’s Ratings Services has affirmed its ‘BBB’ long-term counterparty credit and insurer financial strength ratings on all Alea group operating entities: Alea Europe AG, Alea (Bermuda) Ltd., Alea Global Risk Ltd., Alea Jersey Ltd., Alea London Ltd., Alea North America Insurance Co., and Alea North America Specialty Insurance Co. The outlook is stable however, at the same time, the ratings were withdrawn at the request of the companies’ management. Consequently, S&P’s says it will no longer surveillance any of the Alea group of companies. The Alea group went into run-off in 2005, and S&P’s says management is taking steps to maximize the value of the group, including the sale of renewal rights, the aggressive management of costs, and the commutation of contracts. S&P’s says it expects the Alea group to meet its policyholder obligations in full. Alea Group Holdings (Bermuda) Ltd. (not rated) the holding company of the group has unrated senior debt totaling $200 million and unrated guaranteed trust preferred securities at an intermediate holding company level totaling $120 million. S&P’s reports however, that these are junior to the policyholder obligations of the group’s operating companies. Ongoing shareholder funds support net loss reserves estimated at $1.3 billion. Although there has been adverse reserve development reported in recent years, S&P’s says this is not expected to exhaust shareholder funds, in the operating companies or at the consolidated level.