Swiss Re America Group Upgraded To 'A+' By A.M. Best
A.M. Best Co. has upgraded Swiss Re America Group, New York, to "A+" (Superior) from "A" (Excellent). The rating applies to Swiss Reinsurance America Corp. (SRA) and its two substantially reinsured subsidiaries, North American Specialty Insurance Co. and North American Capacity Insurance Co.
The upgrade reflects the successful execution of the group's strategic operational and organizational realignment as an active and integral member of the Swiss Reinsurance Group, Zurich, one of the largest reinsurers in the world. This restructuring has provided SRA with superior balance sheet strength, sustainable and improved earnings trends, and enhanced market positioning. These strengths are derived from the parent's renewed commitment to the U.S. market, as demonstrated by its $1 billion capital contribution in recent years to fund extraordinary reserve strengthening actions.
The group also has effectively capitalized on its parent's vast network of products, services and expertise as well as its substantial global capacity. These strengths, coupled with a new client-focused underwriting strategy, have created new business opportunities, as evidenced by the strong growth during 1997. SRA's parent has further signaled its support of the group's operations by providing accident year stop-loss protection to limit potential earnings volatility.
These positive rating factors are offset by the group's historically depressed earnings, stemming from its significant exposure to both catastrophe losses and mass tort liabilities, which limited its ability to generate capital and constrained investment opportunities. However, since 1995, SRA has implemented a number of corrective actions to improve its financial performance, including shifting its book of business away from its historical property pro rata focus to selectively target nonproportional casualty risks, improving its risk management capabilities, and mitigating asbestos and environmental reserve uncertainty and earnings drag by strengthening reserves.
These actions, coupled with the group's increased investment earnings as a result of its bolstered asset base and the introduction of parental stop-loss protection, have provided the platform for significantly improved operating results, with returns in excess of 20% over the last two years. Accordingly, A.M. Best views Swiss Re America's rating outlook as stable.
A.M.Best Co., established in 1899, is America's oldest and most widely recognized insurance rating and information source.