A.M. Best Co. affirmed the financial strength ratings of “A++” (superior) of the General Re Group. The rating applies to General Reinsurance Corporation of Delaware and its core property/casualty and life reinsurance and insurance subsidiaries operating both in the United States and internationally. In addition, Best affirmed the senior debt rating of “aa+” and a commercial paper rating of “AMB-1+” of General Re Corporation, the group’s direct parent, and the “aa” senior debt rating to National Re Corporation, an intermediate holding company also located in Delaware. The outlook for all is stable.
The “A++” (superior) rating on the core members of the General Re Group reflects both the implicit and explicit financial support provided by the group’s ultimate parent, Berkshire Hathaway Inc. The rating also recognizes the group’s strengthening balance sheet and respected leadership position in the global reinsurance marketplace. These attributes support the company’s strong prospective earnings capability, enhanced by an underwriting discipline that focuses on adequate pricing and appropriate structures, terms and conditions.
General Re Group’s consolidated risk-adjusted GAAP and U.S. statutory balance sheets’ strength have been sustained over the past two years by significant reinsurance support provided by affiliates, National Indemnity Company and Columbia Insurance Company (Berkshire Hathaway subsidiaries). The calendar year stop-loss reinsurance, which attaches at a 104 percent combined ratio and expires on Dec. 31, 2005, provides $4 billion of total coverage, of which approximately $3.2 billion of limit currently remains. Additionally, Berkshire Hathaway has committed to forego stockholder dividends from General Re Corporation until the group has adequately replenished its stand-alone capital position.
Notwithstanding a conservative reserving posture, the group remains exposed to the potential for further adverse reserve development, given material loss emergence in the primary insurance sector for long-tail casualty classes of business and increased litigation activity relative to asbestos claims.
Topics Reinsurance
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