AM Best affirms A+ rating for RenaissanceRe and subsidiaries

AM Best affirms A+ rating for RenaissanceRe and subsidiaries | Insurance Business Australia

Reinsurance

AM Best affirms A+ rating for RenaissanceRe and subsidiaries

Strong balance sheet, business profile, and ERM cited in the rating

Reinsurance

By
Kenneth Araullo

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” (Superior) for Renaissance Reinsurance Ltd. (RenaissanceRe) and several of its subsidiaries.

These subsidiaries include Renaissance Reinsurance US Inc (Maryland), RenaissanceRe Specialty US Ltd, Renaissance Reinsurance of Europe Unlimited Company (Dublin, Ireland), and RenaissanceRe Europe AG (Zurich, Switzerland).

Additionally, AM Best affirmed the Long-Term ICR of “a-” (Excellent) and the Long-Term Issue Credit Ratings (Long-Term IR) of RenaissanceRe Holdings Ltd (NYSE: RNR).

According to AM Best, RenaissanceRe’s ratings reflect its balance sheet strength, which the rating agency assesses as the strongest, along with adequate operating performance, a very favorable business profile, and robust enterprise risk management (ERM).

AM Best’s assessment of RenaissanceRe’s balance sheet considers the financial flexibility provided by its parent company, RNR, which maintains significant capital at the holding company level.

This capital can be deployed to its underwriting companies when needed. RNR has demonstrated its ability to raise capital in both public and private equity markets, as well as public debt markets.

This ability to attract and deploy capital across varying market conditions is a key factor in AM Best’s evaluation of RenaissanceRe’s balance sheet and the balance sheets of its operating companies.

RenaissanceRe has seen improved operating performance in recent years, benefiting from reduced volatility as its specialty and casualty lines offset the fluctuations in its property catastrophe business.

For the year ending Dec. 31, 2023, RenaissanceRe’s underwriting and fee generation delivered strong operating results in the absence of significant property catastrophe events. Additionally, investment returns increased as the company’s short-duration fixed-income portfolio benefited from reinvestments at higher yields.

AM Best revised RenaissanceRe’s business profile to very favorable from favorable, citing the successful integration of Validus Reinsurance Ltd., which was acquired from American International Group, Inc. in late 2023.

The acquisition enhanced RenaissanceRe’s global market position in property catastrophe reinsurance and boosted its portfolio in casualty and specialty lines, which now represent more than half of its underwriting premiums. RenaissanceRe’s leadership in ERM, risk modeling, and third-party capital management continues to attract external investors, leading to successful joint ventures, including DaVinci, Top Layer Reinsurance Ltd., Vermeer, and Fontana Holdings L.P.

Despite these strengths, RenaissanceRe remains exposed to high-severity losses from global catastrophe events. However, the company’s results have become less volatile, as its diversification into other business lines has helped offset the impact of these losses.

Moving forward, RenaissanceRe is positioned to benefit from favorable market conditions in the global reinsurance sector.

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