A.M. Best has assigned a financial strength rating of A- and issuer credit ratings of a- to the new GeoVera Insurance Group and its four operating entities.

Best assigned a stable outlook for Bermuda-based GeoVera Re Ltd., which was licensed by the Bermuda Monetary Authority at the end of October, Maryland-domiciled GeoVera Insurance Company and USF&G Specialty Insurance Company and California-domiciled Pacific Select Property Insurance Company.

The three US domiciled entities were previously affiliated through inter-company reinsurance agreements with St. Paul Travelers Insurance Companies, however, in August 9 this year St. Paul?s announced plans to sell the three entities to a group of outside investors.

The newly formed GeoVera Insurance Group will focus on underwriting catastrophe exposed residential property risks, primarily in California, Florida and Texas.

An inter-company pooling agreement is in place among the three US based entities, with fifty percent of the pooled results being assumed by GeoVera Re, Ltd., through a quota-share reinsurance agreement.

Best said that the ratings reflect the favourable capitalisation which has resulted from the acquisition and management?s experience in its market segment. The group?s existing management team, which has historically produced profitable results for the entities under the previous St. Paul organisation, will continue to lead the business under the new ownership structure.

The favourable capital position, combined with management?s conservative expansion of its business is anticipated to continue to yield moderate leverage measures, Best said.

Although the group will concentrate all underwriting on providing coverage in catastrophe prone areas, it will combine an established catastrophe modelled web-based quoting/binding system to ensure proper pricing, with an extensive catastrophe reinsurance programme to mitigate its exposure.

Historically, this has resulted in favourable underwriting performance, which is anticipated to continue.