AM Best Affirms Credit Ratings of Swiss Reinsurance Company Ltd and Rated Affiliates

LONDON--()--AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa” (Superior) of Swiss Reinsurance Company Ltd (Switzerland) and its rated operating affiliates. The outlook of the FSR is stable, while the outlook for the Long-Term ICR is negative. At the same time, AM Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) on the debt and the indicative Long-Term IRs on securities available under Swiss Reinsurance Company Ltd’s debt issuance programme. The outlook of these Credit Ratings (ratings) is negative. (See below for a detailed listing of the companies and ratings).

These ratings reflect AM Best’s assessment of the consolidated rating fundamentals of the Swiss Re Ltd (Swiss Re) group, namely its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.

The negative outlook on the Long-Term ICR reflects pressure on Swiss Re’s operating performance assessment. Actions implemented to strengthen the performance of certain sub-segments of its portfolio have led to improvements in underlying results, and in 2021, the group reported a return to underwriting profitability for its non-life divisions (i.e., Property & Casualty Reinsurance and Corporate Solutions). Adverse COVID-19-related mortality continued to weigh on underwriting returns for life business. AM Best is closely monitoring the sustainability of improvements in Swiss Re's overall underwriting performance.

The group has a track record of strong operating performance over the business cycle, with a 10-year (2012-2021) weighted average return on equity of 7.0%, as calculated by AM Best. AM Best expects improved pricing in the reinsurance market and the earn-through of remedial actions taken by Swiss Re in recent years to support prospective underwriting performance. The group reported a net income attributable to shareholders of USD 157 million for the first half of 2022, reflective of profitable non-life underwriting operations, despite elevated natural catastrophe activity and provisions of USD 283 million booked for potential exposures to the Russia-Ukraine war, partially offset by COVID-19 mortality losses in the life segment incurred largely in the first quarter, and mark-to-market losses on equity investments.

Swiss Re’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation comfortably in excess of AM Best’s minimum requirement for the strongest level assessment, as measured by Best’s Capital Adequacy Ratio (BCAR). The assessment also factors in the group’s conservative asset allocation, strong asset liability management capabilities and low dependence on retrocession. In addition, AM Best considers Swiss Re’s financial flexibility excellent, supported by effective capital management.

Swiss Re maintains a leading position in the global reinsurance market. In AM Best’s view, the group’s strong brand and excellent geographic diversification partly insulate it from the impact of competition in the international reinsurance market and position it well to capitalise on improved reinsurance market conditions.

The FSR of A+ (Superior) and the Long-Term ICR of “aa” (Superior) have been affirmed, with a negative outlook on the Long-Term ICR and a stable outlook on the FSR, of Swiss Reinsurance Company Ltd and its following affiliates:

  • Swiss Re Asia Pte. Ltd.
  • Swiss Re Europe S.A.
  • Swiss Re International SE
  • Swiss Re Life & Health America Inc.
  • Swiss Reinsurance America Corporation
  • Westport Insurance Corporation
  • North American Capacity Insurance Company
  • Swiss Re Corporate Solutions America Insurance Corporation
  • Swiss Re Corporate Solutions Premier Insurance Corporation
  • Swiss Re Corporate Solutions Elite Insurance Corporation
  • Swiss Re Corporate Solutions Capacity Insurance Corporation
  • iptiQ Life S.A.

The Long-Term ICR of “a” (Excellent) has been affirmed with a negative outlook for Swiss Re America Holding Corporation.

The following indicative Long-Term IRs on securities available under Swiss Reinsurance Company Ltd’s USD 10 billion debt issuance programme have been affirmed with a negative outlook:

Swiss Reinsurance Company Ltd—
-- “aa” (Superior) on all senior unsecured notes to be issued under the programme
-- “aa-” (Superior) on all senior subordinated notes to be issued under the programme
-- “a+” (Excellent) on all junior subordinated notes to be issued under the programme

The following Long-Term IRs have been affirmed with a negative outlook:

Swiss Reinsurance Company Ltd—
-- “aa-” (Superior) on EUR 500 million 6.625% subordinated notes, due 2042

Swiss Re Treasury (US) Corporation—
-- “aa” (Superior) on USD 250 million 2.875% senior unsecured notes, due 2022
-- “aa” (Superior) on USD 500 million 4.25% senior unsecured notes, due 2042

Swiss Re America Holding Corporation—
-- “a” (Excellent) on USD 600 million 7.00% senior unsecured notes, due 2026
-- “a” (Excellent) on USD 350 million 7.75% senior unsecured notes, due 2030

This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.

AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2022 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

Contacts

Alex Rafferty, ACA
Associate Director, Analytics
+44 20 7397 0312
alex.rafferty@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268
ghislain.lecam@ambest.com

Jeff Mango
Managing Director,
Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com

Dan Hofmeister, CFA, CAIA, CPCU, ARe
Senior Financial Analyst
+1 908 439 2200, ext. 5385
dan.hofmeister@ambest.com

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Contacts

Alex Rafferty, ACA
Associate Director, Analytics
+44 20 7397 0312
alex.rafferty@ambest.com

Christopher Sharkey
Manager, Public Relations
+1 908 439 2200, ext. 5159
christopher.sharkey@ambest.com

Ghislain Le Cam, CFA, FRM
Director, Analytics
+44 20 7397 0268
ghislain.lecam@ambest.com

Jeff Mango
Managing Director,
Strategy & Communications
+1 908 439 2200, ext. 5204
jeffrey.mango@ambest.com

Dan Hofmeister, CFA, CAIA, CPCU, ARe
Senior Financial Analyst
+1 908 439 2200, ext. 5385
dan.hofmeister@ambest.com