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OneBeacon Insurance's (OB) Unit Receives Rating Action

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OneBeacon Insurance Group, Ltd.’s (OB - Free Report) subsidiary, OBI America Insurance Company (“OBIA”), recently received rating action from credit rating giant, A.M. Best. The rating agency assigned a financial strength rating of A (Excellent) and a long-term issuer credit rating of “a” to OBIA. The outlook of the ratings remained stable.

The assigned ratings acknowledge the 100% reinsurance agreement between OBIA and its unit, Atlantic Specialty Insurance Company. Both these companies are the rating unit members of OneBeacon Insurance Group, whose ultimate parent company is property and casualty (P&C) insurer – White Mountains Insurance Group, Ltd. (WTM - Free Report) .

OneBeacon Insurance Group, a specialty P&C insurance firm, focuses on specialized insurance products, industries, classes of business and risk characteristics. OneBeacon Insurance Group’s existing platform for writing workers’ compensation coverage needed expansion and OBIA was formed for this very purpose.

OBIA has potential to receive positive rating actions if OneBeacon Insurance Group’s underwriting and operating results outpaces its peers over a longer time. However, if the said group’s underwriting and operational performance falls below the expectations of the rating agency, then OBIA might witness negative rating actions. Also, a considerable weakening of risk-adjusted capitalization might result in negative ratings.

Rating affirmations or upgrades from credit rating agencies play an important role in retaining investors’ confidence in 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, going forward. 

Zacks Rank and Stocks to Consider

Currently, OneBeacon Insurance carries a Zacks Rank #4 (Sell). Some better-ranked stocks from the same space include National Interstate Corporation (NATL - Free Report) and NMI Holdings, Inc. (NMIH - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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