A.M. Best Affirms Credit Ratings of W. R. Berkley Corporation and Most Subsidiaries

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” of W. R. Berkley Corporation (W. R. Berkley) (Greenwich, CT) [NYSE:WRB]. Concurrently, A.M. Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICRs of “aa-” of Berkley Insurance Company (BIC) (Wilmington, DE) and most of its reinsured subsidiaries and affiliates, collectively referred to as W. R. Berkley Insurance Group (the Berkley Group). A.M. Best also has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” of Berkley Life and Health Insurance Company (Berkley Life and Health) (Urbandale, IA). The outlook of these Credit Ratings (ratings) is stable.

In addition, A.M. Best has extended the rating of BIC to its affiliate, W. R. Berkley Insurance (Europe) Limited (WRBIEL) (London, United Kingdom), reflecting the reinsurance agreements in place between the companies and the guaranty of WRBIEL by BIC. As a result, WRBIEL has become a member of the Berkley Group, and A.M. Best has upgraded the FSR to A+ (Superior) from A (Excellent) and the Long-Term ICR to “aa” from “a+”. The outlook of the FSR remains stable while the outlook of the Long-Term ICR has been revised to stable from negative.

At the same time, A.M. Best has affirmed the Long-Term Issue Credit Ratings (Long-Term IRs) of “a-” for the senior unsecured notes, “bbb+” for subordinated debentures and “bbb” for trust preferred securities issued by W. R. Berkley. The outlook of these ratings is stable. (See link below for a detailed list of the companies and ratings).

The rating affirmations of the members of the Berkley Group reflect the group’s excellent underwriting and operating profitability, solid risk-adjusted capitalization, disciplined underwriting culture and diverse business operations. The ratings also acknowledge the group’s moderate risk profile and lower-than-average catastrophe and reinsurance exposure. While the group does maintain a relatively low exposure to catastrophes, a return to a more normal level of catastrophe and weather events in 2016 was a driver in the decline in underwriting and operating performance in the year, albeit with both continuing to be profitable.

Partially offsetting these positive rating factors are the risks associated with the group’s steady growth in top-line premium in recent years, additional start-up costs relative to new products and business units and competitive conditions in the group’s key commercial lines and reinsurance markets. These offsetting factors notwithstanding, A.M. Best expects the Berkley Group to continue producing favorable underwriting and operating results that outperform its peers through utilization of its proven risk selection, underwriting and pricing practices.

At Dec. 31, 2016, W. R. Berkley’s unadjusted financial leverage measured 33.3%, down from earlier years when it exceeded 35%. While financial leverage remains within A.M. Best’s tolerance for the rating level, it is elevated relative to its peers. After adjusting for the equity component of hybrid securities, the holding company’s financial leverage measured 29.4%. Rating concerns with respect to the leverage metrics is offset substantially by the group’s consistency of earnings, the modest exposure to shock losses and significant cash flows generated annually.

A.M. Best expects W. R. Berkley’s earnings to remain strong, with its interest coverage and financial leverage remaining supportive of the ratings.

The affirmation of the ratings and the outlooks of Berkley Life and Health reflect the financial and operational support of the parent company, continued profitable growth in net premium revenue and a favorable risk-adjusted capital position. Berkley Life and Health continues to strategically expand the organization’s presence in the accident and health market, primarily in the medical stop-loss space.

For a complete listing of the members of W. R. Berkley Corporation’s FSRs, Long-Term ICRs and Long-Term IRs please visit W. R. Berkley.

This press release relates to Credit Ratings 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 see A.M. Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and A.M. Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and A.M. Best Rating Action Press Releases.

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

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Source: A.M. Best