AM Best Affirms Credit Ratings of Swiss Reinsurance Company Ltd and Rated Affiliates; Revises Issuer Credit Rating Outlook to Negative
The Credit Ratings (ratings) reflect AM Best’s assessment of the rating fundamentals of the consolidated Swiss Re Ltd (Swiss Re) group, namely its balance sheet strength, which AM Best categorises 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, following non-life underwriting losses in recent periods, partly driven by the casualty book of business. The group has implemented actions to improve the performance of certain sub-segments of its portfolio. However, these actions have had limited impact on results so far. AM Best will continue to monitor Swiss Re’s underwriting performance, particularly in the
Swiss Re’s operating performance benefits from good diversification of earnings, which has limited the negative impact of underperformance in areas of the non-life book on the overall results in recent periods. In particular, its life and health operations have demonstrated good profitability over the past few years, as evidenced by a return on equity between 10-15% since 2015. In addition, the group possesses strong asset management capabilities, which help it navigate the prevailing low interest rate environment and financial market volatility.
In the first quarter of 2020, Swiss Re’s performance was adversely affected by COVID-19-related claims, particularly in the event cancellation line of business. Losses related to the pandemic will have a negative impact on the group’s operating results for the year, with the full extent of losses subject to material uncertainty. Nonetheless, AM Best believes that Swiss Re’s balance sheet is resilient to absorb the potential impact, based on its portfolio and market share.
Swiss Re’s balance sheet strength is underpinned by consolidated risk-adjusted capitalisation that is comfortably in excess of AM Best’s minimum requirements for the strongest level assessment, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as its conservative asset allocation and low dependency on retrocession. In addition, AM Best considers Swiss Re’s financial flexibility as excellent, supported by effective capital management. A partially offsetting factor in the balance sheet strength assessment is the adverse prior-year development reported on
Swiss Re maintains a leading position in the global reinsurance market. In AM Best’s view, the group’s strong brand and excellent geographical diversification partly insulate it from the impact of intense competition in the international reinsurance market and position it well to benefit from the hardening market conditions.
The FSR of A+ (Superior) and the Long-Term ICR of “aa” have been affirmed, with the outlook of the Long-Term ICR revised to negative from stable and the outlook of the FSR maintained at stable, for
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Swiss Re Asia Pte. Ltd -
Swiss Re Europe S.A. -
Swiss Re International SE -
Swiss Re Corporate Solutions Ltd -
Swiss Re Life & Health America Inc. -
Swiss Reinsurance America Corporation -
Westport Insurance Corporation -
North American Specialty Insurance Company -
North American Capacity Insurance Company -
North American Elite Insurance Company -
Washington International Insurance Company -
First Specialty Insurance Corporation -
Swiss Re Portfolio Partners S.A. - iptiQ
Life S.A.
The Long-Term ICR of “a” has been affirmed and the outlook revised to negative from stable for
The following indicative Long-Term IRs on securities available under Swiss Reinsurance Company Ltd’s
Swiss Reinsurance Company Ltd—
-- “aa” on all senior unsecured notes to be issued under the programme
-- “aa-” on all senior subordinated notes to be issued under the programme
-- “a+” on all junior subordinated notes to be issued under the programme
The following Long-Term IRs have been affirmed with the outlook revised to negative from stable:
Swiss Reinsurance Company Ltd—
-- “aa-” on
Swiss Re Treasury (US) Corporation—
-- “aa” on
-- “aa” on
Swiss Re America Holding Corporation—
-- “a” on
-- “a” on
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 media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
AM Best is a global credit rating agency, news publisher and data analytics provider specializing in the insurance industry. Headquartered in
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Source: AM Best
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