OLDWICK, N.J.--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A (Excellent) and the issuer credit rating (ICR) of “a” of Validus Reinsurance, Ltd. (Validus Re) (Bermuda) and Validus Reinsurance (Switzerland) Ltd. (VRS) (Zurich, Switzerland). Additionally, A.M. Best has affirmed the ICR of “bbb” and debt ratings of the parent company, Validus Holdings, Ltd. (Validus Holdings) (Bermuda) (NYSE:VR). The outlook for all ratings is stable. (See below for a detailed listing of debt ratings.)
The ratings reflect Validus Re’s strong risk-adjusted capitalization, solid operating performance, since inception and through varying market conditions, experienced management team, excellent enterprise risk management program and prudent operating strategies. The company's consistent positive operating results demonstrate the capability of producing results that are at the high end of its peer group. Validus has the expertise and capacity to write diverse books of business globally and is well-positioned to successfully manage through the current competitive market environment. Further supporting the ratings of the group is that the ultimate parent, Validus Holdings, can provide financial flexibility as a publicly traded company on the New York Stock Exchange.
Partially offsetting these strengths are the company's exposure to high severity events as a property catastrophe-focused reinsurer and the increased competition from capital markets in this space. However, the company's risk-adjusted capital remains at levels that have been stress tested to absorb significant catastrophe losses mitigating this concern. Additionally, Validus Holdings has enhanced the business profile of the group by diversifying the company's revenues to include other lines of business, spreading risk exposures geographically and expanding its distribution channels, which has increased its client base and scale. The stable outlooks reflect A.M. Best's expectation that the group will continue to produce favorable long-term operating results and maintain excellent risk-adjusted capitalization, which remains supportive of its current rating levels.
Rating factors that could lead to an upgrading of the ratings and/or a positive outlook would be the continuation of long-term, consistently strong operating profitability relative to Validus Re's peer group and maintaining strong risk-adjusted capital levels. Rating factors that could lead to a downgrading of the ratings and/or a revision of an outlook to negative include outsized catastrophe or investment losses relative to its peer group, unfavorable operating profitability trends and a significant decline in risk-adjusted capital that would not be supportive of the current rating levels.
The following debt ratings have been affirmed:
Validus Holdings, Ltd.—
-- “bbb” on $250 million 8.875% senior unsecured notes, due January 2040
The following indicative ratings for securities available under the shelf registration have been affirmed:
Validus Holdings, Ltd.—
-- “bbb” on senior unsecured debt
-- “bbb-” on subordinated debt
-- “bb+” on preferred stock
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:
• Catastrophe Analysis in A.M. Best Ratings
• Rating Members of Insurance Groups
• Insurance Holding Company and Debt Ratings
• Risk Management and the Rating Process for Insurance Companies
• Understanding Universal BCAR
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.
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