OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of “aa-” of the U.S. property/casualty (P/C) subsidiaries of Swiss Reinsurance Company Ltd (Swiss Re) and Swiss Re Corporate Solutions Ltd (Swiss Re Corp) (both domiciled in Switzerland). A.M. Best also has affirmed the FSR of A+ (Superior) and ICR of “aa-” of Swiss Re’s U.S. life/health (L/H) subsidiary, Swiss Re Life & Health America Inc. (SRLHA) (Armonk, NY). The outlook for all ratings is stable. (Please see link below for a detailed listing of the companies and ratings.)
The ratings of SRLHA reflect its role as a key global operating subsidiary within the Swiss Re group. SRLHA operates as a marketer of life and health reinsurance solutions for the United States, an important global market for Swiss Re, whose L/H reinsurance segment generates approximately one-third of Swiss Re group’s worldwide net earned premiums.
The ratings also reflect SRLHA’s good risk-adjusted capital position and its leading market position in both the U.S. individual ordinary life and group life reinsurance segments. Furthermore, SRLHA increased its U.S. ordinary recurring reinsurance market share to 19.6% as of year-end 2013, up from 18.2% in 2012.
Offsetting rating factors include the potential for future volatility in certain SRLHA’s statutory operating performance and balance sheet metrics. SRLHA operates a transaction-oriented business model supported by the use of parental and affiliate retrocession, which can result in fluctuating financial results. Furthermore, SRLHA has more recently encountered earnings challenges associated with its pre-2004, post-level term U.S. business and its March 2013 recapture of yearly renewable term business that was ceded to Berkshire Hathaway Inc. in 2010.
The ratings of the U.S. P/C subsidiaries of Swiss Re and Swiss Re Corp, including Swiss Reinsurance America Corporation (New York, NY) and Westport Insurance Corporation (Jefferson City, MO), reflect the U.S. P/C subsidiaries’ excellent business profile, strong risk-adjusted capitalization and superior underwriting and overall results. The ratings also recognize that the U.S. P/C subsidiaries are fully integrated and make a significant contribution to Swiss Re group’s overall operations and earnings.
These positive rating factors are partially offset by deteriorating reinsurance market conditions, as well as the Swiss Re group’s, and by extension its U.S. P/C subsidiaries, significant exposure to natural and man-made catastrophes and the associated earnings volatility.
Positive rating actions could follow if Swiss Re’s consolidated risk-adjusted capitalization remains strong, its P/C reinsurance business continues to perform well through the depressed stage of the reinsurance cycle, and if the group’s efforts to improve the profitability within its L/H reinsurance segment prove effective.
Negative rating actions are unlikely, but could follow if Swiss Re’s operating performance and risk-adjusted capitalization consistently fall below A.M. Best’s expectations.
For a complete listing of FSRs, ICRs and debt ratings of the U.S. P/C and L/H subsidiaries of Swiss Reinsurance Company Ltd and Swiss Re Corporate Solutions Ltd, please visit http://www.ambest.com/press/110605SWISSREUS.pdf.
The methodology used in determining these ratings is Best’s Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.
Key insurance criteria reports utilized:
• A.M. Best’s Perspective on Operating Leverage
• Analyzing Insurance Holding Company Liquidity
• Catastrophe Analysis in A.M. Best Ratings
• Equity Credit for Hybrid Securities
• Insurance Holding Company and Debt Ratings
• Rating Members of Insurance Groups
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR
• Understanding BCAR for U.S. and Canadian Life/Health Insurers
• Understanding BCAR for Property/Casualty Insurers
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
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