I posted an ERM-related press release from the S&P recently which was very well received by Riskczar readers as measured by the number of hits received. Here is a very similar one that notes that counterparty credit rating on Platinum Underwriting Holdings Ltd. increased to ‘BBB+’ from ‘BBB’. I really like the comments from credit analyst Tracy Dolin in the last paragraph of the release.
“A downgrade is unlikely because of Platinum’s very strong cycle management, strong ERM, and strong capital base. Additional favorable rating actions are also unlikely because of the company’s static competitive position relative to peers.”
I interpret this to explicitly say that ERM was not only one of three variables to improve the credit rating, but was also one of three which may prevent their credit rating from declining. Talk about peer pressure.
I believe we will continue to see good ERM programs being the X-factor in future credit rating (un)changes.
Finally, I am not a credit spread expert but would ask anyone reading this to provide some context as to the cost of debt between BBB+ and BBB debt. For example, what is the annual interest expense for every $1 million of debt at current interest rates and credit spreads for that little (+) sign after those three-Bs?