Two subsidiaries of Bermuda insurer CRM Holdings have seen their ratings from AM Best come under review with negative imoplications, because of a threat to an affliate's New York third-party administrative licence.

Best has placed the financial strength ratings (FSR) of A- (Excellent) and issuer credit ratings (ICR) of "a-" of Majestic Insurance Company and Twin Bridges (Bermuda) Ltd. under review with negative implications.

Concurrently, A.M. Best has placed the ICRs of "bbb-" of CRM Holdings Ltd. (CRMH) (Hamilton, Bermuda) Embarcadero Insurance Holdings, Inc. (San Francisco, CA) and CRM USA Holdings, Inc. (Delaware) under review with negative implications.

Additionally, AM Best has placed the debt rating of "bb" of the trust preferred securities of CRM USA Holdings Inc. and the "bb" of the surplus notes of Embarcadero Insurance Holdings, Inc. under review with negative implications.

Best said its actions reflected concern over the potential impact on Majestic and Twin Bridges from the issues faced by their affiliate, Compensation Risk Managers LLC and their ultimate parent, CRM Holdings.

These issues stem from administrative charges brought by the New York Workers' Compensation Board, which could result in the possible revocation of the third-party administrator licence of Compensation Risk managers in New York and potential fines and/or penalties associated with the allegations.

Additionally, the under-review status reflects the impact on the financial flexibility of CRM Holdings Ltd. due to the decline in the market value of its common stock following the announced charges, as well as the limited capital available through its insurance subsidiaries to support their anticipated growth.

Furthermore, 2007 capitalisation levels at Majestic fell somewhat short of the requirement by AM Best for the ratings based on higher premium growth, partially attributable to previously self-insured business being written on a first-dollar basis.