OREANDA-NEWS. S&P Global Ratings said today that it has affirmed its financial strength and long-term counterparty credit ratings on Navigators Group Inc. and its operating subsidiaries (collectively, Navigators). The outlook is stable.

"The rating affirmation reflects our view of Navigators' strong business risk profile and very strong financial risk profile. Under our criteria, these factors lead to possible anchor of either 'a+' or 'a', and we assigned the latter reflecting management's expanding risk posture due to somewhat lower reliance on reinsurance utilization, expansion focus, and relatively narrow competitive position compared with peers," said S&P Global Ratings credit analyst David Veno.

With about $1.5 billion in annual gross premiums written, Navigators has built a diversified global specialty business with concentrations in marine, property and casualty, and professional liability with a complementary and opportunistic assumed reinsurance strategy. To support further business growth, the company expanded its international business in continental Europe through its Lloyd's syndicate and has increased premium volume in its U. S. excess and surplus business.

Navigators' capital adequacy is currently extremely strong, but we expect capital to be somewhat pressured as the company grows its business and retains more risk. Consequently, we are projecting redundancy at the very strong level through 2017 in our base-case scenario.

"We have revised our assessment of Navigators' liquidity score to strong from exceptional due to modest uptick of speculative grade assets and the inclusion of Navigators' Lloyd's operations in the liquidity analysis," Mr. Veno continued. "We recognize that management has not shifted in investment strategy--the average ratings of its fixed income assets remains 'AA'--but the underlying credit quality of some of its assets has slightly deteriorated."

The stable outlook reflects our view that Navigators will continue generating profitable operating results as it expands its underwriting and that its risk profile will not change materially. We expect capital adequacy to remain redundant at the very strong level

We may lower our ratings in the next 24 months if Navigators' operating performance deteriorates below peers' or if earnings volatility increases as a result of growth in business.

"We are unlikely to raise our ratings in the next two years. Any upgrade would depend on a sustainable material competitive advantage relative to peers," Mr. Veno added.