A.M. Best Co. announced that it has upgraded the financial strength rating to “A+” (Superior) from “A” (Excellent) of France’s Caisse Centrale de Reassurance (CCR), and has revised its outlook to stable from positive.
“This action reflects A.M. Best’s forecast of a positive underwriting result for its traditional portfolio in 2004,” said the bulletin. “CCR continues to benefit from favourable market conditions, although premium rates stabilised at the January 2004 renewals. CCR has also cancelled unprofitable business fulfilling expectations to reduce its combined ratio for this book of business by 13 percent to 104 percent in 2003.”
Best explained that CCR’s book of business is natural catastrophe and special risks. It benefits from the “explicit support of the French state, triggered when claims exceed an aggregate limit calculated as a fixed percentage of the previous year’s reserves.”
Best said its “overall assessment of the capitalisation factors this protection by the French state and the low probability of default on these policies.” The rating agency added that despite “strong premium growth of 28 percent to 439 million euros ($551 million) in 2003,” it does note “expect the traditional open market business to exceed the current 45 percent of the portfolio in the near term.”
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