A.M. Best Co. has issued a bulletin, indicating that its ratings on the “Swiss Re Group and its rated entities remain under review with negative implications,” following the publication of the Group’s 2005 earnings results (See IJ Website March 1).
Best noted that Swiss Re “reported a consolidated net profit of CHF 1.5 billion ($1.15 billion) and a combined ratio for its traditional non-life business of 108.7 percent. This is a deterioration from the 97.0 percent achieved year end 2004, driven by a CHF 3.0 billion ($2.3 billion) loss from natural catastrophes in 2005 which was partially compensated by a release in equalization reserves.
“Swiss Re’s property portfolio remained profitable in 2005 with a combined ratio of 97.5 percent, despite the company’s exposure to Hurricanes Katrina, Rita and Wilma totaling CHF 1.1 billion ($ 0.84 billion), as a positive claims run-off and the dissolution of equalization reserves helped to absorb this.”
Best said it “will discuss with Swiss Re’s management the potential for further adverse reserve developments in Swiss Re’s liability portfolio where the combined ratio increased to 126.4 percent at year end 2005 from 118.7 percent in 2004. This was mainly due to additional reserve strengthening for the underwriting years 1999 – 2001, which was, however, mostly compensated by positive developments in other lines of business. A.M Best will also continue discussions with Swiss Re regarding the planned acquisition of GE Insurance Solutions.”