Best Affirms Gen Re and Subs Ratings; Outlook Stable

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

These companies are collectively known as the General Re Group, or Gen Re. 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 GenRe’s “robust 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 said. “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 with an FSR of ‘A++’ (Superior).”

Best’s report explained that the relationship with Berkshire “provides Gen Re with enhanced financial flexibility and investment expertise. The NICO and CIC reinsurance coverages, which were effective January 1, 2005, provide substantial reinsurance protection to Gen Re’s U.S. property/casualty companies through both a loss portfolio transfer and quota share agreement.”

Best noted that “Gen Re maintains superior risk-based capitalization that is fully supportive of its ratings and risk appetite and is further enhanced by an operating performance that is complemented by a steady flow of 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.”

The report said Gen Re’s life operations “continue to maintain positive operating earnings and adequate capital to support their overall insurance operations. Gen Re’s life operations primarily consist of individual life and accident and health reinsurance lines of business.

“Although growth has been somewhat limited in the last few years, the life operations continue to produce solid underwriting results. In addition the investment portfolio has performed well and has obtained strong yields. Partially offsetting these strengths are the continued losses in the long-term care line of business, which is in run off. The life operations are expected to remain an important source of income and diversification for Gen Re.

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

The report summarized the companies affected by the ratings as follows:
The FSR of ‘A++’ (Superior) and the ICRs of “aa+” have been affirmed for General Reinsurance Corporation and its following core property/casualty and life reinsurance/ insurance subsidiaries:
— Faraday Reinsurance Co Limited
— General Re Life Corporation
— General Reinsurance Australia Ltd
— General Reinsurance Life Australia Ltd.
— General Reinsurance AG
— General Reinsurance Africa Ltd
— General Star Indemnity Company
— General Star National Insurance Company
— Genesis Insurance Company

The FSR of ‘A-‘ (Excellent) and the ICR of “a-” have been affirmed for IdeaLife Insurance Company, a subsidiary of General Reinsurance Corporation.

The FSR of ‘B+’ (Good) and the ICR of “bbb-” have been affirmed for Commercial Casualty Insurance Company, a subsidiary of General Reinsurance Corporation.

Source: A.M. Best