LONDON--(BUSINESS WIRE)--A.M. Best has affirmed the financial strength rating of A+ (Superior) and the issuer credit rating of “aa” of Intercona Re AG (Intercona) (Switzerland). The outlook for each rating is stable.
The ratings reflect Intercona’s importance to Nestlé S.A. (Nestlé) and its high level of integration within the group’s risk management function. Furthermore, the ratings consider Intercona’s excellent risk-adjusted capitalisation, strong technical performance and diversified business portfolio, by line of business and geographic location.
Intercona’s risk-adjusted capitalisation is likely to remain at an excellent level in 2016, supported by large equalisation and fluctuation reserves, and the retention of profits. The captive has maintained strong underwriting performance despite incurring a number of large losses in recent years, as demonstrated by its five-year average combined ratio of 81%. However, Intercona’s operating performance continues to be tempered by volatile investment results owing to the effect of exchange rate fluctuations and adverse movements in the global financial markets. Nonetheless, Intercona’s capital and performance are protected by its modest per risk and aggregate underwriting limits.
Intercona is a wholly owned captive reinsurer of Nestlé, a leading global food and beverage company. Intercona provides 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.
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.
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