AM Best Affirms Credit Ratings of Swiss Reinsurance Company Ltd and Rated Affiliates; Revises Issuer Credit Rating Outlook to Negative

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

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 U.S. casualty segment; should the underlying performance not improve in the short-to-medium term, a further negative rating action on the Long-Term ICR is likely.

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 U.S. casualty reserves over the past two years.

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 Swiss Reinsurance Company Ltd and its following affiliates:

• 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 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 assigned with a negative outlook:

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 EUR 500 million 6.625% subordinated notes, due 2042

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

Swiss Re America Holding Corporation—
-- “a” on USD 600 million 7.00% senior unsecured notes, due 2026 (of which USD 397 million remains outstanding)
-- “a” on USD 350 million 7.75% senior unsecured notes, due 2030 (of which USD 193 million remains outstanding)

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 the United States, the company does business in over 100 countries with regional offices in New York, London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City. For more information, visit www.ambest.com.

Copyright © 2020 by A.M. Best Rating Services, Inc. and/or its affiliates. ALL RIGHTS RESERVED.

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Valeria Ermakova

Associate Director, Analytics

+44 20 7397 0269

valeria.ermakova@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



Jim Peavy

Director, Public Relations

+1 908 439 2200, ext. 5644

james.peavy@ambest.com



Dan Hofmeister, CFA, CAIA, CPCU, ARe

Financial Analyst

+1 908 439 2200, ext. 5385

dan.hofmeister@ambest.com

Source: AM Best