Platinum & RenRe Ratings Placed Under Review

November 26, 2014

Following the announcement that RenaissanceRe will purchase Platinum Underwriters, A.M. Best has placed RenaissanceRe under review with “negative implications,” and placed Platinum under review with “developing implications.”

The aggregate consideration for the transaction between the two Bermuda-based re/insurers is $1.9 billion, consisting of 7.5 million RenaissanceRe common shares, valued at approximately $761 million, and $1.16 billion of cash.

Speaking on RenaissanceRe, A.M. Best said,  ”This transaction would give RenaissanceRe additional scale and help broaden its product offering. However, this transaction also represents a significant commitment on the part of RenaissanceRe to continue its move into casualty business, which is outside of the organization’s core competency of property catastrophe reinsurance.

“The under review status will be removed once the deal closes and A.M. Best completes its analysis. Factors that could result in negative rating actions include weakened risk-adjusted capitalization levels as a result of the acquisition, the perception that prospective operating results will be below that of the organization’s historical run rate, the lack of retention of key personnel or details of the transaction that are not known to A.M. Best at this time.

“Factors that could lead to rating affirmations are strong risk-adjusted capital levels coupled with a well-thought out business plan that demonstrates strong and stable operating performances throughout the organization going forward. In addition, A.M. Best is interested in understanding the tactical execution of the business plan as it relates to the combined organization.

As far as Platinum’s ratings, A.M. Best said, “The under review with developing implications status reflects the limited information available regarding the transaction and the uncertainty around RenaissanceRe’s future plans for Platinum.

“Additionally, there is some concern with the retention of key personnel at Platinum to underwrite the business, which A.M. Best considers important as RenaissanceRe has limited experience in casualty business, due to its focus on property catastrophe reinsurance.

“The ratings will remain under review pending the completion of the transaction and A.M. Best’s continuing discussions with management relative to the future plans for the Platinum legal entities.”

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