LONDON--(BUSINESS WIRE)--A.M. Best has assigned a financial strength rating of A+ (Superior) and an issuer credit rating of “aa” to Intercona Re AG (Intercona) (Switzerland). The outlook assigned to both ratings is stable.
The ratings reflect Intercona’s importance to Nestlé S.A. (Nestlé) (Switzerland), and its high level of integration within the group’s risk management function. Furthermore, the ratings reflect Intercona’s excellent risk-adjusted capitalisation, robust technical performance and diversified business portfolio, by line of business and geographic location.
Intercona is a wholly owned captive reinsurer of Nestlé, a leading global food and beverage company. Intercona’s primary function is to provide the working layer of reinsurance protection, absorbing losses from the group’s global insurance programme. The captive benefits from Nestlé’s financial strength and is a key part of its parent's overall risk management framework, assisting with the mitigation of risk exposures and loss prevention. Intercona enables Nestlé to optimise its insurance protection in terms of scope and cost.
Intercona’s risk-adjusted capitalisation is likely to remain strong in 2015, supported by large equalisation and fluctuation reserves and the retention of profits. The captive has maintained a robust underwriting performance despite incurring a number of large losses in recent years, as demonstrated by its five-year average combined ratio of 84%. Intercona’s capital and performance is somewhat protected by its modest per risk and aggregate underwriting limits.
Positive or negative rating actions on Intercona may occur if there is a material change in the credit worthiness of Nestlé. Negative rating actions could also follow a prolonged weakening in Intercona Re’s underwriting profitability as well as a significant deterioration in its risk-adjusted capitalisation. Furthermore, a decline in the strategic importance of Intercona to Nestlé would result in negative rating pressure.
A.M. Best remains the leading rating agency of alternative risk transfer entities, with more than 200 such vehicles rated 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.
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 utilised:
- Alternative Risk Transfer (ART)
- Catastrophe Analysis in A.M. Best Ratings
- Evaluating Country Risk
- Evaluating Non-Insurance Ultimate Parents
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M. Best Europe - Rating Services Limited Supplementary Disclosure.
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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