Swiss Re gets stable, A+ rating after GE acquistion

A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit rating (ICR) of “aa” of Swiss Reinsurance Company (Swiss Re) (Switzerland) and its rated subsidiaries, following the company’s completed acquisition of GE Insurance Solutions.
The ratings have been removed from under review, where they were placed on Nov.18 , 2005 with negative implications. A.M. Best has now assigned a negative outlook to Swiss Re’s ICRs and debt ratings and a stable outlook to the FSRs.
In addition, A.M. Best has removed from under review and affirmed the rated subsidiaries of GE Insurance Solutions Corporation (GEIS) (Overland Park, KS) with a stable outlook.
The GE rating action includes the affirmation of the FSR of A (Excellent) and the ICR of “a” of Employers Reinsurance Corporation, GE Reinsurance Corporation and First Specialty Insurance Corporation (together known as Employers Re Corp Group [ERC]), and Westport Insurance Corporation.
The GE rating action also includes the affirmation of the FSR of B+ (Very Good) and the ICR of “bbb-” of Coregis Insurance Company. The ICR and debt ratings of GEIS have also been removed from under review and affirmed with a stable outlook.
“In A.M. Best’s view, Swiss Re’s risk-adjusted capitalization remains very strong following the acquisition of GEIS, despite higher capital requirements from an increased exposure of the combined group to natural catastrophes and other acquisition effects,” A.M. Best announced in a press release. Specifically, A.M. Best noted a profit of CHF1.6 billion (US$1.3 billion) and internal financing of US$1.2 billion.
“Swiss Re achieved an excellent post-tax profit of CHF1.6 billion (US$1.3 billion) (which includes 21 days of GEIS’ results) in the first six months of 2006, benefiting from stable premium rates but also from benign catastrophe and a large claims environment in this period,” A.M. Best noted in a press release. “The overall combined ratio for Swiss Re’s traditional property and casualty book of business improved by 3.3 percentage points to 93% in the first six months of 2006. “
A.M. Best said it expected the property and casualty results for the full year of 2006 “will be largely influenced by the U.S. hurricanes season in the second half of 2006.”
Swiss Re, A.M. Best noted, “has adjusted its North Atlantic hurricane modeling following hurricanes Katrina, Rita and Wilma and has recently issued US$950 million in natural catastrophe protection against its four peak natural catastrophe risks. The combined group’s natural catastrophe exposure has increased in 2006, adding potential volatility to its results, although the group’s exposure protection combined with the improved diversification alleviates some of the concerns.”