A.M. Best Affirms Ratings Of Top Layer Re
A.M. Best Co.has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit rating (ICR) of “aa-” of Top Layer Reinsurance Ltd. (Top Layer) (Hamilton, Bermuda). The outlook for both ratings is stable.
The ratings reflect the substantial amount of support Top Layer receives from its co-owners, State Farm Mutual Automobile Insurance Company (State Farm) (currently with an FSR of A++ [Superior] and an ICR of “aa+”) and Renaissance Reinsurance Ltd. (RenRe) (currently with an FSR of A+ [Superior] and an ICR of “aa-”).
A statement said: “Since Top Layer’s inception in 1999, the company has generated outstanding operating results, which are due to the property catastrophe underwriting expertise of RenRe, combined with very few catastrophes significant enough to impact the programs written in Top Layer’s core markets.
“Top Layer’s business scope is limited to the assumption of high excess layers of non-U.S. property catastrophe risks underwritten on a global basis. The company experienced its first and second loss years in its history in 2010 and 2011, and it has performed in line with how it was designed.
“Top Layer maintains a modest amount of on-balance sheet capital relative to the high excess layers of property catastrophe risks it assumes. The company’s capital profile is rather unique from a qualitative and quantitative perspective, but fundamentally Top Layer offers clients credit security in the layers of a reinsurance program where credit security is paramount.
“Top Layer’s capitalization is enhanced through various contractual obligations, resulting in substantial capital support and reinsurance protection from State Farm and, to a much lesser degree, RenRe. The occurrence of losses will trigger capital calls for State Farm and RenRe to replenish Top Layer’s capital.
“Moreover, State Farm provides Top Layer with $3.9 billion excess of $100 million stop-loss reinsurance protection. This coverage is significantly larger than the aggregate exposures Top Layer undertakes in each of its geographic zones.
“A.M. Best acknowledges that Top Layer’s ratings are largely dependent upon the support it receives from State Farm and RenRe. A.M. Best monitors these companies on an ongoing basis and continues to assess how any developments may impact Top Layer’s ratings.”
