TransRe ratings boosted by ‘historic’ results
Transatlantic Reinsurance’s exceptionally good 2013 results, in which its earnings reached a near historic high, contributed to the outlook on its single-A financial strength rating from AM Best being revised to positive from stable.
The rating also revised the outlook of the ratings of Alleghany Corporation and Transatlantic Holdings to positive from stable.
AM Best said: “The positive outlook reflects TransRe’s strong global business profile, solid operating results and robust risk management practices. The ratings also reflect TransRe’s excellent risk-adjusted capitalization, diversified book of business and stabilized reserve position.
“Year-end 2013 results were at or near historic highs, due to discipline underwriting and the relatively benign level of catastrophic events and strong investment income despite a difficult investment environment for TransRe’s largely fixed income portfolio.
“TransRe also benefits from the support and stability provided by Alleghany, as both organisations have benefitted from TransRe’s acquisition and integration into the Alleghany operations. Both Alleghany and TransRe Holdings’ debt-to-capital and coverage ratios remain well within the acceptable range for their current ratings.”
However, AM Best recognised that current conditions in the reinsurance market have become increasingly competitive due to increased capacity in the market and greater retentions among primary insurers putting additional pressure on traditional reinsurers.
In the future, potential upward movement on TransRe’s ratings could result from continued consistent operating performance and sustained strong risk-adjusted capitalization.
“Negative rating actions could occur if TransRe incurs an outsized catastrophic or investment loss relative to its peer group, or its operating performance consistently falls below the market, resulting in erosion of its capital base and a decline in its risk-based capitalization.”
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