Best Affirms Gen Re Group’s ‘A++’ Ratings; Outlook Stable

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A++’ (Superior) and issuer credit ratings (ICR) of “aa+” of General Reinsurance Corporation, headquartered in Stamford, Conn., and its core property/casualty and life reinsurance /insurance subsidiaries operating in the United States and internationally – collectively known as the General Re Group.

Best also affirmed the ICR of “aa+” and the commercial paper of AMB-1+ of General Re Corporation. The outlook for all ratings is stable, with the exception of the commercial paper, which does not have an outlook.

The ratings reflect Gen Re’s “strong operating performance, consistently superior risk-based capitalization and diversified operating platform, which includes both property/casualty and life business segments with worldwide market profiles,” Best explained.

These “positive aspects are further reinforced by the support provided by Gen Re’s ultimate parent, Berkshire Hathaway Inc., and the reinsurance coverages provided by Berkshire affiliates, National Indemnity Company (NICO) and Columbia Insurance Company (CIC), both rated A++ (Superior).”

Best indicated that Gen Re’s relationship with Berkshire provides it “with enhanced financial flexibility and investment expertise. The NICO and CIC reinsurance coverages, which were effective January 1, 2005, provide substantial reinsurance protection through both a loss portfolio transfer and quota share agreement.

“Gen Re maintains superior risk-based capitalization that is fully supportive of its ratings and risk appetite and further enhanced by a consistently strong operating performance that is complemented by investment income from its well diversified investment portfolio managed by Berkshire.

“Gen Re also maintains an extensive risk management program that measures risk throughout its operations. The program includes formal risk management committees, a capital model and well documented corporate governance.”

On the life side Best said: “Gen Re’s life operations primarily consist of individual life and accident and health reinsurance lines of business. The life operations continue to produce positive, although decreasing, operating earnings due to strong underwriting offset by losses from the run-off of the long-term care line of business. In addition, the investment portfolio has performed well and obtained strong yields. The life operations are expected to remain an important source of income and diversification for Gen Re.”

In conclusion Best said: “Positive rating actions could occur if over the next several years, Gen Re’s operating performance and risk-adjusted capitalization significantly and consistently exceed its peer group of global reinsurers.

“Negative rating actions could occur if Gen Re’s operating performance and risk-adjusted capitalization consistently fall below A.M. Best’s expectations for its current rating level by a significant margin for a prolonged period.”

Best summarized the companies affected by its rating actions as follows:

The FSR of A++ (Superior) and ICRs of “aa+” have been affirmed for the following core property/casualty and life reinsurance and insurance members of General Re Group:
• Faraday Reinsurance Company Limited
• General Re Life Corporation
• General Reinsurance Australia Ltd
• General Reinsurance Life Australia Ltd.
• General Reinsurance AG
• General Reinsurance Africa Ltd
• General Reinsurance Corp
• General Star Indemnity Company
• Genesis Star National Insurance Company
• Genesis Insurance Company

The following debt has been affirmed:
General Re Corporation—
— AMB-1+ on commercial paper

The FSR of A- (Excellent) and ICR of “a-” have been affirmed for IdeaLife Insurance Company.

The FSR of B+ (Good) and ICR of “bbb-” have been affirmed for Commercial Casualty Insurance Company.

Source: A.M. Best