A.M. Best Places Credit Ratings of RenaissanceRe Holdings Ltd. and Its Subsidiaries Under Review with Developing Implications

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Best has placed under review with developing implications the Financial Strength Rating (FSR) of A+ (Superior) and the Long Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of Renaissance Reinsurance Ltd. (RenRe), Renaissance Reinsurance U.S. Inc. (RenRe U.S.), RenaissanceRe Specialty U.S. Ltd. (RenRe Specialty U.S. Ltd.), and Renaissance Reinsurance of Europe Unlimited Company (Dublin, Ireland). Additionally, A.M. Best has placed under review with developing implications the Long-Term ICR of “a-” and all Long-Term Issuer Credit Ratings (Long-Term IR) of RenaissanceRe Holdings Ltd. (RenaissanceRe) [NYSE: RNR]. A.M. Best also has placed under review with developing implications the FSR of A (Excellent) and the Long-Term ICR of “a+” of DaVinci Reinsurance Ltd. (DaVinci) and the Long-Term ICR of “bbb+” of DaVinci Re Holdings Ltd. All aforementioned companies are domiciled in Bermuda unless otherwise specified. (See below for a detailed listing of the Long-Term IRs.)

The rating actions follow the recent announcement that RenaissanceRe has entered into a definitive agreement with Tokio Marine Holdings, Inc. (Tokio Marine) under which it will acquire Tokio Marine’s reinsurance platforms, which includes Tokio Millennium Re AG (TMR) and Tokio Millennium Re (UK) Limited. If closing tangible book value is unchanged from June 30, 2018, Tokio Marine would receive USD 1.469 billion (or 1.02x TMR’s tangible book value) in a combination of cash and stock. The agreement has been approved by each side’s board of directors and the transaction, subject to customary closing conditions and regulatory approval, is expected to close in the first half of 2019.

The transaction is being financed with RenaissanceRe’s cash on hand and equity. As part of the acquisition, Tokio Marine will receive $250 million worth of RenaissanceRe shares. Additionally, Tokio Marine has agreed to provide RenRe with a $500 million adverse development cover that will protect TMR’s book of reserves for five years.

In addition, RenaissanceRe announced that State Farm will acquire $250 million in RenaissanceRe’s stock and become a 4.8% owner of the company, in an investment transaction which is not conditioned on the closing of the Tokio Marine reinsurance platforms acquisition.

The ratings will remain under review pending completion of the transaction and A.M. Best will continue to hold discussions with RenaissanceRe management and monitor the company’s risk-adjusted capitalization, operating performance, business profile and enterprise risk management.

The following Long-Term IRs have been placed under review with developing implications:

RenaissanceRe Holdings Ltd.
— “bbb” on $250 million 6.08% Series C perpetual preferred stock
— “bbb” on $275 million 5.375% Series E perpetual preferred stock

RenaissanceRe North American Holdings Inc. (guaranteed by RenaissanceRe Holdings Ltd.)
— “a-” on $250 million 5.75% senior unsecured notes, due 2020

RenaissanceRe Finance Inc. (guaranteed by RenaissanceRe Holdings Ltd.)
— “a-” on $300 million 3.7% senior unsecured notes, due 2025
— “a-” on $300 million 3.45% senior unsecured notes, due 2027

The following indicative Long-Term IRs under the shelf registration have been placed under review with developing implications:

RenaissanceRe Holdings Ltd.
— “a-” on senior unsecured
— “bbb+” on subordinated
— “bbb” on preferred stock

RenaissanceRe Capital Trust II
— “bbb” on trust preferred securities

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.

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A.M. Best

Mariza Costa

Senior Financial Analyst

+1 908 439 2200, ext. 5154

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Christopher Sharkey

Manager, Public Relations

+1 908 439 2200, ext. 5159

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Robert DeRose

Senior Director

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Jim Peavy

Director, Public Relations

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Source: A.M. Best