Ratings agency AM 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, AM 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 US subsidiaries of AXA SA (AXA) (France).
“The ratings for AXA Art reflect the significant change to its business profile as the company has entered a run-off status,” said AM Best in a release.
“The fine art business previously written by AXA Art was renewed to AXA Insurance beginning January 1, 2014. AM 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.”
AM Best added that 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’s primary US insurer of reverse flow business representing the domestic portion of multinational accounts generated by AXA affiliates,” it said. “As noted, AXA Insurance is now the primary direct writer of the AXA organisation’s fine arts coverage in the United States. Coliseum Re remains in run-off status. The company continues to maintain adequate capitalisation and liquidity relative to its remaining liabilities.”
AM Best said it 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 SA to these US insurance subsidiaries could also spark rating action.”