AXA Art Insurance Credit Rating Downgraded

Marketwatch is reporting that AXA Art Insurance Corporation credit rating had been downgraded from a+ to a by AM Best.  The release states changes in business, including lower expected cashflow from preimiums and higer claims was the cause.

Marketwatch reports

OLDWICK, N.J., Jun 12, 2015 (BUSINESS WIRE) -- A.M. Best has downgraded the issuer credit rating to “a” from “a+” and affirmed the financial strength (FSR) rating of A (Excellent) of AXA Art Insurance Corporation (AXA Art) (New York, NY). The outlook for these ratings has been revised to negative from stable.

Concurrently, A.M. Best has affirmed the FSR of A (Excellent) and the ICR of “a+” of AXA Insurance Company (AXA Insurance) (New York, NY), and affirmed the FSR of B++ (Good) and the ICR of “bbb” of Coliseum Reinsurance Company (Coliseum Re) (Wilmington, DE). The outlook for these ratings is stable. All of the above companies are U.S. subsidiaries of AXA S.A. (AXA) (France) [OTC: AXAHY.PL].

The ratings for AXA Art reflect the significant change to its business profile as the company has entered a run-off status. The fine art business previously written by AXA Art was renewed to AXA Insurance beginning Jan. 1, 2014. A.M. Best’s concerns focus on the company’s ability to generate sufficient cash flow from operations and its ability to retain appropriate levels of assets to support liabilities. Nonetheless, the company’s risk-adjusted capital levels currently appear more than sufficient, though ultimate development remains to be recorded.

The ratings for AXA Insurance reflect its strong stand-alone attributes, including its risk-adjusted capitalization, solid underwriting fundamentals and overall operating profitability. The company serves as AXA’sprimary U.S. insurer of reverse flow business representing the domestic portion of multinational accounts generated by AXA affiliates. As noted, AXA Insurance is now the primary direct writer of the AXA organization’s fine arts coverage in the United States.

Coliseum Re remains in run-off status. The company continues to maintain adequate capitalization and liquidity relative to its remaining liabilities.

A.M. Best believes the ratings for these companies are well-positioned at their current level. Factors that could lead to downward rating pressure include loss of risk-adjusted capital or operating performance falling markedly short. Specific to AXA Insurance, negative rating pressure could result from deterioration in loss trends or material disruptions to the current business strategy. Separately, Coliseum Re and AXA Art are subject to potential negative rating actions should adverse development occur in the remaining run-off exposures. Any perceived lessening of support provided by AXA S.A. to these U.S. insurance subsidiaries could also spark rating action.

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. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

Key insurance criteria reports utilized:

Rating Members of Insurance Groups
Risk Management and the Rating Process for Insurance Companies
Understanding BCAR for Property/Casualty Insurers
Evaluating Country Risk
Rating Run-Off Insurers and Specialists
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center .

Source: Marketwatch