January 31, 2014

A.M. Best Europe – Rating Services Limited has affirmed  the financial strength rating (FSR) of ‘A+’ (Superior) and issuer credit ratings (ICR) of “aa-” of Swiss Reinsurance Company Ltd, European Reinsurance Company of Zurich Ltd, Swiss Re Europe S.A., based in Luxembourg, Swiss Re International SE, also in Luxembourg and Swiss Re Corporate Solutions Ltd, based in  Switzerland.

The ratings reflect the Swiss Re group’s “excellent consolidated risk-adjusted capitalization, strong operating performance and superior business profile as a leading global reinsurer,” Best said.

Best indicated that the “group is expected to continue to benefit from excellent consolidated risk-adjusted capitalization, despite a decline in 2013 reflecting regular and special dividend payments, a decrease in unrealized gains reserve due to rising interest rates and an increase in the group’s underwriting risk due to the expiry of its property/casualty whole account quote share with a subsidiary of Berkshire Hathaway, Inc.

“The group’s risk-adjusted capitalization benefits from good diversification and is enhanced by hybrid debt, including several contingent capital instruments issued in the last few years which improve financial flexibility. In addition, the Swiss Re group has negligible exposure to peripheral European sovereign debt.”

In addition  the ratings report noted that the “group’s performance record in recent years has been strong,” and Best said it “expects good results to be reported for 2013, with the three business segments—Reinsurance, Corporate Solutions and Admin Re— contributing positively to the result.”

Best also, indicated that it “expects the Property & Casualty Reinsurance and Corporate Solutions segments to report strong profits, benefitting from the relatively benign catastrophe experience of the year.” In Life & Health Reinsurance, Best said it “expects a good result, despite the earnings drag from some underperforming U.S. portfolios.

“The ratings benefit from the Swiss Re group’s position as a leading global reinsurer, underpinned by a wide product offering and a worldwide distribution system. The Reinsurance segment is well-diversified by line of business and geography. Moreover, the group’s product offering is further enhanced by the primary insurance business underwritten by Corporate Solutions and Admin Re’s capabilities within the closed block life business segment.”

In conclusion best said “positive rating actions could occur if over the next several years, Swiss Re group’s operating performance and consolidated risk-adjusted capitalization consistently exceed that of peer reinsurers.

“Negative rating actions could occur if operating performance or consolidated risk-adjusted capitalization were to fall below A.M. Best’s expectations for the group’s current rating level.

A detailed list of all of the companies covered by the ratings analysis is available.

Source: A.M. Best