Twin Bridges (Bermuda) Ltd. has been removed from under review with negative implications and has its FSR downgraded to B++ (good) from A- (excellent) and ICR to "bbb" from "a-" by AM Best Co.

The ratings agency has concurrently removed from under review with negative implications and affirmed the financial strength rating (FSR) of A- (excellent) and issuer credit rating (ICR) of "a-" of Majestic Insurance Company (Majestic) (San Francisco, Calfornia).

Both companies are subsidiaries of Bermuda based CRM Holdings Ltd.

Additionally, Best has removed from under review with negative implications and affirmed the ICRs of "bbb-" of CRM Holdings, Embarcadero Insurance Holdings, Inc. (San Francisco, California) and CRM USA Holdings Inc. (Wilmington, Delaware).

It has also has removed from under review with negative implications and affirmed the debt ratings of "bb" of the trust preferred securities of CRM USA Holdings Inc. and the "bb" of the surplus notes of Embarcadero Insurance Holdings Inc. The outlook assigned to all ratings is negative.

These rating actions reflect Majestic's improved risk-adjusted capitalisation following the implementation of a capital re-allocation plan by its parent, CRM Holdings, as well as the execution of a quota share reinsurance arrangement with a third party reinsurer.

Furthermore, the issues that were faced by an affiliate, Compensation Risk Managers LLC (CRM LLC) with the New York Workers' Compensation Board have been settled with no admission of wrong doing, fines or penalties.

However, CRM LLC has agreed to surrender its third party administrator license.

Despite this settlement, Best remains concerned regarding the financial flexibility at CRM Holdings largely due to the significant decline in its valuation, as well as the limited capital available through its insurance and non-insurance subsidiaries.

The rating actions on Twin Bridges recognise the deterioration in its risk-adjusted capitalisation primarily due to stock dividends made in the second quarter of 2008 to CRM Holdings as part of its overall plan to re-allocate capital to Majestic.

The following debt ratings have been affirmed and assigned a negative outlook:

CRM USA Holdings, Inc. - "bb" on $35 million 8.65 percent junior sub-ordinated debt securities, due 2036.

Embarcadero Insurance Holdings, Inc. - "bb" on $8 million LIBOR+ 4.2 percent surplus notes, due 2033.