AM Best Affirms Validus Re’s Excellent Ratings

March 3, 2024 | 0 Comments

Following a review, AM Best has affirmed the Financial Strength Rating of A [Excellent] and the Long-Term Issuer Credit Ratings of Validus Reinsurance, Ltd. and Validus Reinsurance [Switzerland] Ltd.

The ratings agency said, “AM Best has removed from under review with developing implications and affirmed the Financial Strength Rating of A [Excellent] and the Long-Term Issuer Credit Ratings of “a” [Excellent] of Validus Reinsurance, Ltd. [Validus Re] [Hamilton, Bermuda] and Validus Reinsurance [Switzerland] Ltd. [VRS] [Zurich, Switzerland], which are affiliates of RenaissanceRe Holdings Ltd [RenRe Holdings] [Pembroke, Bermuda]. The outlook assigned to these Credit Ratings [ratings] is stable.

“The ratings reflect Validus Re’s and VRS’ balance sheet strength, which AM Best assesses as very strong, as well as their adequate operating performance, limited business profile and appropriate enterprise risk management. The ratings further reflect the implicit and explicit support provided from ultimate parent, RenRe Holdings.

“Validus Re and VRS were both acquired as part of RenRe Holdings’ purchase of the treaty reinsurance business of American International Group, Inc. [AIG], in a transaction that closed in November 2023. Today’s rating actions follow the completion of AM Best’s review of RenRe Holdings’ future plans for both entities. AM Best notes that the underwriting portfolios of Validus Re and VRS are in the process of being de-risked significantly, as their business is being renewed with separate RenRe Holdings affiliates. Exposure to Validus’ legacy liabilities is curtailed largely by the existence of a reserve development cover, under which AIG retains 95% of favorable or unfavorable reserve development on business written by Validus prior to its acquisition by RenRe Holdings.

“RenRe Holdings has put in place explicit support for both Validus Re and VRS, in the form of net worth maintenance agreements, which supplements the explicit support that is based on AM Best’s expectation that RenRe Holdings will manage the Validus balance sheets to the same risk and capital management standards that it applies to its existing balance sheets.”

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