A.M. Best Affirms Ratings of Everest Re Group Ltd., Its Subsidiaries and Everest Reinsurance Holdings Inc.

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best Co.has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of “aa-” of Everest Re Group Ltd.’s(Everest Re) (Bermuda) [NYSE: RE] reinsurance and insurance subsidiaries. Concurrently, A.M. Best has affirmed the ICRs of “a-” of Everest Reand Everest Reinsurance Holdings Inc. (Delaware). A.M. Best also has affirmed the debt ratings of Everest Re, Everest Reinsurance Holdings Inc., Everest Capital Trust II and Everest Capital Trust III. The outlook for all ratings is stable. (See below for a detailed listing of the companies.)

The ratings reflect Everest Re’s consistently superior risk-adjusted capital position, long-term track record of generating favorable earnings and market profile as a leading global provider of insurance and reinsurance products. Given its conservative financial leverage measures, Everest Re maintains strong financial flexibility with the ability to effectively manage its capital through market cycles. This is evident by Everest Re’s five-year average combined ratio, which is below break-even, representing underwriting profitability. Cash flows from operations also have been consistently strong. Everest Re’s balance sheet is supported by its conservative investment strategy with the current investment portfolio held at a shorter duration, and equities at less than 10% of total investments. A.M. Best believes that Everest Re has maintained strong traditional risk management capabilities and has established an enterprise risk management framework that effectively identifies, measures and monitors existing and emerging risks across its respective businesses and enables the efficient allocation of capital.

Everest Re continues to benefit from a seasoned management team, which has successfully deployed its low-cost operating structure to profitably distribute its reinsurance and insurance products globally through a large network of insurance and reinsurance intermediaries. Due to its diversified product offering and geographic spread, A.M. Best believes Everest Re is well positioned within its business sector to continue to perform in line with its peer group.

Somewhat offsetting these positive rating factors are the group’s exposure to large catastrophe losses. As part of its catastrophe management process, Everest Re utilizes catastrophe modeling and establishes risk limits to control catastrophic exposures on a probable maximum loss (PML) and aggregate basis, although catastrophe losses could impact earnings in a given year.

The group also maintains net asbestos and environmental (A&E) exposure of approximately $530 million, which has been declining in recent years. A&E reserves are monitored on a quarterly basis against emerging trends with the most-recent review indicating that current reserve levels are adequate.

Due to moderate financial leverage, the group maintains a significant amount of capital to support its insurance and debt obligations. A.M. Best expects Everest Re to continue to manage its outstanding debt and preferred issues at a level no greater than 25% of total capital with its fixed charge coverage remaining strong.

The FSRs of A+ (Superior) and ICRs of “aa-” have been affirmed for the following operating reinsurance and insurance subsidiaries of Everest Re Group Ltd.:

• Everest Reinsurance Company
• Everest Reinsurance (Bermuda), Ltd.
• Everest International Reinsurance, Ltd.
• Everest Reinsurance Company (Ireland), Limited
• Everest National Insurance Company
• Everest Indemnity Insurance Company
• Everest Security Insurance Company
• Everest Insurance Company Canada

The following debt ratings have been affirmed:

Everest Reinsurance Holdings, Inc.—

-- “a-” on $250 million 5.4% senior unsecured notes, due 2014
-- “bbb” on $400 million 6.6% fixed to floating long term junior subordinated notes, due 2067

Everest Re Capital Trust II — (guaranteed by Everest Reinsurance Holdings, Inc.)

-- “bbb+” on $320 million 6.20% trust preferred capital securities, due 2034

The following indicative ratings have been affirmed under the shelf registration:

Everest Re Group, Ltd. —

-- “a-” on senior unsecured debt
-- “bbb+” on subordinated debt
-- “bbb” on preferred stock

Everest Reinsurance Holdings, Inc. —

-- “a-” on senior unsecured debt
-- “bbb+” on subordinated debt

Everest Re Capital Trust III— (guaranteed by Everest Reinsurance Holdings, Inc.)

-- “bbb+” on trust preferred securities

The principal methodology used in determining these ratings is Best’s Credit Rating Methodology -- Global Life and Non-Life Insurance Edition, which provides a comprehensive explanation of A.M. Best’s rating process and highlights the different rating criteria employed. Additional key criteria utilized include: “Rating Members of Insurance Groups”; “Risk Management and the Rating Process for Insurance Companies”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; “Natural Catastrophe Stress Test Methodology”; “A.M. Best’s Ratings & the Treatment of Debt”; and “Assessing Country Risk Methodology.” Methodologies can be found at www.ambest.com/ratings/methodology.

Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2011 by A.M. Best Company, Inc.ALL RIGHTS RESERVED.

A.M. Best CompanyGale Guerra, 908-439-2200, ext. 5069
Senior Financial Analyst
[email protected]
orChris Sharkey, 908-439-2200, ext. 5159
Business Analyst
[email protected]
orPeter Dickey, 908-439-2200, ext. 5053
Assistant Vice President
[email protected]
orJim Peavy, 908-439-2200, ext. 5644
Assistant Vice President, Public Relations
[email protected]

Source: A.M. Best Company