AM Best Affirms Credit Ratings of Everest Re

May 31, 2020

AM Best has affirmed the Financial Strength Rating of A+ [Superior] and the Long-Term Issuer Credit Ratings of “aa-” of the operating subsidiaries of Bermuda-based Everest Re Group, Ltd.

The ratings agency said, “Concurrently, AM Best has affirmed the Long-Term ICRs of “a-” of Everest Re Group, Ltd. and Everest Reinsurance Holdings, Inc. [Delaware]. Additionally, AM Best has affirmed the Long-Term Issue Credit Ratings [Long-Term IR] of Everest Reinsurance Holdings, Inc. The outlook of these Credit Ratings [ratings] is stable. [See below for a detailed listing of the companies and ratings.]

“At the same time, AM Best has assigned an FSR of A+ [Superior] and a Long-Term ICR of “aa-” to Everest Insurance [Ireland] Designated Activity Company [Ireland], which is now an operating subsidiary of Everest. The outlook assigned to these ratings is stable.

“The ratings reflect Everest’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, very favorable business profile and appropriate enterprise risk management for the group’s risk profile.

“AM Best’s assessment of Everest’s balance sheet strength as strongest is attributed to the group’s robust levels of risk-adjusted capitalization, as measured by Best’s Capital Adequacy Ratio [BCAR], on a standard and stressed basis. Also reflected in the group’s balance sheet strength assessment is Everest’s high quality of capital and a retrocession program that helps limit downside risk. Everest also benefits from low financial leverage compared with peer companies and long-term, very strong coverage metrics that enhance the group’s financial flexibility.

“The group maintains a very favorable business profile as a leading non-life reinsurer, ranking in the top 10 of AM Best’s Top 50 Global Reinsurance Groups, with particular expertise in writing property-catastrophe cover. Everest also provides additional market capacity through its Mt. Logan Re platform, and Kilimanjaro Re catastrophe bonds. Despite its historical property-catastrophe predominance, Everest has grown in more attritional lines of business and has continued to build out its insurance segment’s footprint in recent years. AM Best believes that Everest’s very favorable business profile has helped the group generate profitable business under very competitive conditions.

“Everest has produced operating performance metrics that consistently outperform its peer group despite its elevated risk profile and exposure to shock loss events. AM Best believes Everest’s performance is partially attributable to its well-established risk management infrastructure, which is embedded across the organization. Everest also benefits from a relatively low expense ratio that allows the group to absorb more readily significant losses compared with many of its peers. Everest’s insurance segment has begun to show underwriting profitability, which can provide meaningful earnings diversification.

“Rating factors that could lead to a positive outlook or rating upgrade include the continuation of long-term, consistently strong operating profitability relative to peers and maintaining the strongest level of risk-adjusted capital. Factors that could lead to negative rating actions include deteriorating trends in operating profitability, outsized catastrophe or investment losses relative to peers and/or AM Best’s expectations, significant adverse loss reserve development, and/or a material decline in risk-adjusted capital at the group’s insurance operating companies.”

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