A.M. Best Affirms Ratings of Cedar Court Indemnity Company

A.M. Best has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of Cedar Court Indemnity Company (Cedar Court) (Burlington, VT). The outlook for both ratings is stable.

The ratings reflect Cedar Court’s strong risk-adjusted capitalization, conservative operating strategy and the critical role it plays as a parent captive insurer of Honeywell International Inc. (Honeywell) [NYSE:HON]. Honeywell is a global, Fortune 100 diversified technology and manufacturing organization, serving customers worldwide in the aerospace market, control technologies for buildings, turbochargers and performance materials. As a parent captive of Honeywell, Cedar Court provides insurance products and services to the various subsidiaries of Honeywell for certain liability risks.

Partially offsetting these positive rating factors are Cedar Court’s relatively large reserves and incurred but not reported (IBNR) reserves as well as volatile underwriting performance in recent years. Despite volatility, A.M. Best recognizes the role Cedar Court plays, its mission and the ability to accept risk and volatility in exchange for availability and pricing. Its captive orientation also considers the substantial financial resources of its parent, Honeywell.

A.M. Best also recognizes Cedar Court’s management and corporate strategy, enterprise risk management practices and its conservative risk culture. Other rating factors that A.M. Best considered include, but are not limited to, the diversification in Cedar Court’s business and geographic scope.

Factors that could lead to Cedar Court’s ratings being upgraded or an outlook revised to positive include long-term consistently strong operating performance, maintaining strong risk-adjusted capital levels and executing its business plan. On the other hand, A.M. Best could downgrade Cedar Court’s ratings and/or revise an outlook if its risk-based capitalization declines below supportive levels, operating performance and risk profile deteriorate or insured losses deplete capital. In addition, negative rating impact could occur as a result of turnover in its management team and/or risk management controls and tolerances, or its parent’s ratings deteriorate.

A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated in the United States and throughout the world. For current Best’s Credit Ratings and independent data on the captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.

This press release relates to rating(s) that have been published on A.M. Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best’s Ratings & Criteria Center.

A.M. Best is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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