Abstract: In this paper we will discuss about A.M. Best Co.'s ratings, that is, both the financial strength rating and issuer credit rating, for American Livestock Insurance Company (ALI).
The company was underrated in 2007 after Hiscox Ltd declared its plan to own ALI. The ratings had been assigned a “stable outlook”.
In August 2007, A.M. Best Co. revised its financial strength rating and issuer credit rating for American Live Stock Insurance Company.
The two ratings were changed from A+ and “aa-” to A and “a” respectively. These ratings were assigned a “stable outlook”.
The ratings were disclosed right after Hiscox Ltd's announcement of a possible merger with ALTHOA, Inc., which was an insurance holding firm, and its two subsidiaries, namely, Harding & Harding Inc., an insurance agency, and American Live Stock Insurance Company.
However, those ratings reflected that ALS' growth curve was moving downward. The most possible reason behind that was the on going challenges created by Hiscox Ltd with its several new products.
On the contrary, the “stable outlook” showed that A.M Best had enough faith on American Live Stock Insurance Company's risk management framework.
Hiscox Ltd, as mentioned earlier, was used to trade on London Stock Exchange. It brought ample expertise into American Live Stock Insurance Company in terms of a strong management team, capital flexibility and efficient technology platform.
This merger allowed Hiscox to expand its businesses through the American Live Stock Insurance Company.