Best Puts Life Reassurance, Swiss Re Life & Health Under Review
A.M. Best Co. today placed the "A+" (Superior) ratings of Life Reassurance Corporation of America (LRCA) and Swiss Re Life & Health America under review with developing implications. The action followed the announcement by Swiss Reinsurance Corp., Zurich, Switzerland, that it plans to acquire LRCA's parent holding company, Life Re Corp.
The combined North American operations of Life Re and Swiss Re will be the largest worldwide reinsurer specializing in life and health business. A.M. Best views positively the potential for synergies and leadership in the market under Swiss Re ownership and the opportunities for growth that the combined organization will likely have in North America. However, the integration of the operations—their management teams and capital-management and growth strategies—and their expansion plans in the North American market will have to be examined before the acquisition's rating impact can be determined.
The transaction is being financed by about U.S. $1.8 billion in cash from internal sources in Switzerland (approximately 2.7 billion Swiss francs at today's exchange rate). A.M. Best expects the current levels of debt and leverage at Life Re Corp. to be reduced following this acquisition.
The life/health business will be conducted from Stamford, CT; Toronto; New York City; and London. Because of its experienced team of reinsurance professionals, substantial data-processing capabilities, emphasis on quality service, and cost-efficient operations, it is expected to maintain a strong position in the reinsurance market. Life Re was the only publicly traded independent life reinsurer in the United States. It has a broad customer base and enjoys client relationships with many of the largest life and health insurers in the United States.
This transaction, which is expected to be completed late in 1998 or early 1999, subject to regulatory approval, will provide LRCA with significant capital resources to continue its strategies of growth of direct blocks of life insurance business to be administered through its subsidiary Reassure America Life Insurance Co., which complements the traditional life reinsurance business of Life Re.