A.M. Best Upgrades Most ACE Subsidiaries
A.M. Best has upgraded the financial strength rating (FSR) to A++ (Superior) from A+ (Superior) and the issuer credit ratings (ICR) to “aa+” from “aa” of the North American property/casualty subsidiaries of ACE Limited (ACE) (Zurich, Switzerland), ACE Bermuda Insurance Ltd. (ACE Bermuda), ACE Tempest Reinsurance Ltd. (ACE Tempest Re) (both domiciled in Bermuda), the members of the ACE American Pool, ACE INA Insurance (Canada) and ACE Tempest Re’s parent, ACE Tempest Life Reinsurance Ltd (ATLRE) (Bermuda).
Additionally, A.M. Best has upgraded the ICR and senior debt ratings to “a+” from “a” of ACE and its wholly owned downstream holding company, ACE INA Holdings Inc., whose debt is fully guaranteed by ACE. The outlook for all the above ratings has been revised to stable from positive.
A.M. Best said, “The ratings for the core property/casualty subsidiaries of ACE reflect their strong risk-adjusted capitalization, diversified global operation enhanced by prudent acquisitions over the past few years and the historically favorable record of generating strong earnings and cash flows. The balance sheet for these core subsidiaries is strengthened by controlled financial leverage, a relatively conservative investment portfolio that generates stable earnings and favorable loss reserve development in recent years.
“The positive rating factors are derived from management’s experience and consistent focus on underwriting profitability generated by effective risk selection and pricing standards, and maintenance of appropriate policy limits and exposure to catastrophes, including the use of reinsurance to manage net retentions.
“ACE’s strong enterprise risk management (ERM) program relies on close collaboration of executives and operating departments to identify, assess and control enterprise risk and accumulations. The effectiveness of the ERM program is demonstrated by risk-adjusted capital levels and overall earnings that have remained strong and consistent through soft market conditions, the global financial crisis and the increase in global catastrophe and weather-related events.
“Continued competitive pricing in the market, combined with a lower level of reserve redundancies and investment returns, requires ACE to remain focused and diligent in executing pricing discipline, product and risk selection capabilities and managing exposure levels to generate continued positive underwriting results.
“Other offsetting rating factors include the group’s exposure to emerging asbestos and environmental claims and natural and man-made catastrophes. The property/casualty subsidiaries’ capital also is exposed to varying dividend demands and higher than industry average ceded reinsurance leverage, driven by the nature of their business, agricultural and captive/cash flow programs and recoverables relating to their run-off book.”
