|[July 25, 2014]
A.M. Best Affirms Ratings of Everest Reinsurance (Bermuda) Ltd., Its Subsidiaries and Everest Re Group Ltd.
OLDWICK, N.J. --(Business Wire)--
A.M. Best has affirmed the financial strength rating (FSR) of A+
(Superior) and the issuer credit ratings (ICR) of "aa-" of Everest
Reinsurance (Bermuda) Ltd. (Everest Re) (Bermuda) (NYSE:RE) and its
reinsurance and insurance subsidiaries. Concurrently, A.M. Best has
affirmed the ICRs of "a-" of Everest Re Group, Ltd. (Bermuda) and
Everest Reinsurance Holdings Inc. (Delaware). Additionally, A.M.
Best has assigned a debt rating of "a-" to the $400 million 4.868%
senior unsecured notes, due 2044, recently issued by Everest Reinsurance
Holdings Inc. A.M. Best also has affirmed the debt ratings of Everest Re
Group, Ltd., Everest Reinsurance Holdings Inc. and Everest Capital
Trust III. The outlook for all ratings is stable. (See below for a
detailed listing of the companies and ratings.)
The ratings reflect Everest Re's consistently superior risk-adjusted
capital position, long-term track record of generating favorable
earnings, experienced management team, strong enterprise risk management
(ERM) framework and market profile as a leading global provider of
insurance and reinsurance products. Given its conservative financial
leverage measures, Everest Re maintains strong financial flexibility
with the ability to effectively manage its capital through market
cycles. This is evidenced by Everest Re's 10-year average combined
ratio, which is below breakeven, representing underwriting
profitability. Cash flows from operations also have consistently been
strong. Everest Re's balance sheet is supported by its conservative
investment strategy with the current investment portfolio held at a
shorter duration and equities at less than 10% of total investments.
Everest Re continues to benefit from a seasoned management team, which
has successfully deployed its low-cost operating structure to profitably
distribute its reinsurance and insurance products globally through a
large network of insurance and reinsurance intermediaries. Due to its
diversified product offering and geographic spread, A.M. Best believes
Everest Re is well positioned within its business sector to continue to
perform in lin with its peer group despite the current competitive
A.M. Best believes that Everest Re maintains strong ERM capabilities and
has established a risk management framework that effectively identifies,
measures and monitors existing and emerging risks across its respective
businesses and enables the efficient allocation of capital. It is A.M.
Best's opinion that Everest Re continues to enhance its ERM and internal
Offsetting these positive rating factors is the organization's exposure
to large catastrophe losses. As part of its catastrophe management
process, Everest Re utilizes catastrophe modeling and establishes risk
limits to control catastrophic exposures on a probable maximum loss and
aggregate basis, although catastrophe losses could impact earnings in
any given year. The organization also maintains net asbestos and
environmental (A&E) exposure of approximately $387 million, which has
been steadily declining in recent years. A&E reserves are monitored on a
quarterly basis against emerging trends with the most recent review
indicating that current reserve levels are adequate.
Rating factors that could lead to an upgrading of Everest Re's ratings
and/or a positive outlook include the continuation of long-term,
consistently strong operating profitability relative to its peers and
maintaining strong risk-adjusted capital levels.
Rating factors that could lead to a downgrading of the organization's
ratings and/or a revised outlook include unfavorable operating
profitability trends, outsized catastrophe or investment losses relative
to peers and A.M. Best's expectations, significant adverse loss reserve
development and/or a material decline in risk-adjusted capital.
The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for Everest
Reinsurance (Bermuda) Ltd. and its following reinsurance and
Everest Reinsurance Company
Everest International Reinsurance, Ltd.
Everest Reinsurance Company (Ireland), Limited
Everest National Insurance Company
Everest Indemnity Insurance Company
Everest Security Insurance Company
Everest Insurance Company Canada
The following debt rating has been affirmed:
Everest Reinsurance Holdings, Inc.-
-- "bbb" on $400 million
6.6% fixed-to-floating long-term junior subordinated notes, due 2067
The following indicative ratings have been affirmed under the shelf
Everest Re Group, Ltd.-
-- "a-" on senior unsecured debt
"bbb+" on subordinated debt
-- "bbb" on preferred stock
Everest Reinsurance Holdings, Inc.-
-- "a-" on senior
-- "bbb+" on subordinated debt
Everest Re Capital Trust III-(guaranteed by Everest Reinsurance
-- "bbb+" on trust preferred securities
The methodology used in determining these ratings is Best's Credit
Rating Methodology, which provides a comprehensive explanation of A.M.
Best's rating process and contains the different rating criteria
employed in the rating process. Best's Credit Rating Methodology can be
found at www.ambest.com/ratings/methodology.
A.M. Best Company is the world's oldest and most authoritative
insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2014 by A.M. Best Company, Inc. ALL RIGHTS
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