A.M. Best Co. announced that it has affirmed the financial strength ratings of “A+” (Excellent) of Swiss Reinsurance America Corporation, headquartered in Armonk N.Y., and its P/C insurance subsidiaries, which comprise the Swiss Re America Group.
“These ratings apply to Swiss Reinsurance America Corporation (New York), North American Capacity Insurance Company (New Hampshire), North American Elite Insurance Company (New Hampshire), North American Specialty Insurance Company (New Hampshire) and Washington International Insurance Company (Arizona),” said Best. It also announced that it has assigned an issuer credit rating of “aa” to Swiss Re America. The outlook on all ratings is stable.
“The affirmation of the financial strength ratings reflects Swiss Re America’s excellent stand-alone risk adjusted capitalization and significant market presence supported by a sophisticated senior management team, full service capabilities and exceptional business franchise,” said Best. “Further, the ratings reflect Swiss Re America’s core importance to its ultimate parent, Swiss Re (Zurich, Switzerland) and the benefit it receives from the explicit and implicit financial support from Swiss Re.” Best has also affirmed Swiss Re’s ratings (See IJ Website Dec. 23).
Best also noted the following factors concerning the ratings:
“Swiss Re America’s overall financial position, however, has come under pressure as a result of weak underwriting performance in recent years underscored by reserve strengthening stemming from the 1997-2001 accident years, as well as U.S. environmental and asbestos exposure, which has resulted in an erosion of its risk-adjusted capital position despite the use of internal retrocessional agreements. Further, operating performance has recently been negatively affected by interest credits related to funds held under reinsurance treaties.
“As a result, despite significant parental support, and as part of the standard rating process, A.M. Best expects Swiss Re America’s net earnings and risk-adjusted capitalization to improve over the next 12 months. Continued poor performance and declining risk-based capitalization would put pressure on the assigned rating and core status.”
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