CONTACTS:
FOR IMMEDIATE RELEASE
OLDWICK, N.J. - JULY 29, 2010 12:00 AM (EDT)
A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of Everest Re Group, Ltd.'s (Everest Re) (Bermuda) [NYSE: RE] reinsurance and insurance subsidiaries. Concurrently, A.M. Best has affirmed the ICRs of "a-" of Everest Re and Everest Reinsurance Holdings, Inc. (Delaware). A.M. Best also has affirmed the debt ratings of Everest Re, Everest Reinsurance Holdings, Inc., Everest Re Capital Trust II and III. The outlook for all ratings is stable. (See below for a detailed listing of the companies and ratings.)
Everest Re's ratings reflect its consistently superior risk-adjusted capitalization and excellent market profile as a leading global reinsurance company. Additionally, Everest Re maintains solid diversification by product line through its complementary primary insurance operation. The company's leading position in the industry is further enhanced by a worldwide distribution system and strong broker relations.
The group benefits from an experienced management team, which has a demonstrated long-term track record of success in allocating capital to profitable business lines throughout varying phases of the reinsurance pricing cycle. Everest Re maintains a robust risk management system, which identifies and monitors existing as well as emerging risks across its respective business lines, then allocates capital accordingly.
Somewhat offsetting these positive rating factors has been Everest Re's consistent strengthening of prior year reserves in relatively small increments; although, modest in respect to its sizable reserve and capital position. Despite these adjustments, which dampen operating results, Everest Re's five- and ten-year average combined ratios are below breakeven, which represents underwriting profits. Additionally, Everest Re is exposed to large catastrophe losses as well as the cyclical changes occurring in the current market environment. As part of its catastrophe management process, Everest Re utilizes catastrophe modeling and establishes risk limits to control catastrophic exposures on both a probable maximum loss (PML) and aggregate basis. Although catastrophe losses could impact earnings in a given quarter and year, Everest Re has successfully managed market cycles and unforeseen events as evidenced by its 10-year average return on equity of 11.7%, while maintaining very strong capital levels.
Furthermore, both financial leverage and interest coverage are at acceptable levels relative to Everest Re's ratings. A.M. Best expects Everest Re to maintain total debt-to-capital measures below 25% in the mid term.
The FSR of A+ (Superior) and ICRs of "aa-" have been affirmed for the following core operating reinsurance and insurance subsidiaries of Everest Re Group, Ltd.:
- Everest Reinsurance Company
- Everest Reinsurance (Bermuda), Ltd.
- Everest International Reinsurance, Ltd.
- Everest Reinsurance Company (Ireland), Limited
- Everest National Insurance Company
- Everest Security Insurance Company
- Everest Indemnity Insurance Company
The FSR of A+ (Superior) and ICR of "aa-" have been withdrawn, and an NR-5 (Not Formally Followed) and "nr" have been assigned to Everest Re US Group.
The following debt ratings have been affirmed:
Everest Reinsurance Holdings, Inc.—
- "a-" on $250 million 5.40% senior unsecured notes, due 2014
- "bbb" on $400 million 6.60% fixed to floating long term junior subordinated notes, due 2067
Everest Re Capital Trust II—(guaranteed by Everest Reinsurance Holdings, Inc.)
- "bbb+" on $320 million 6.20% trust preferred capital securities, due 2034
The following indicative ratings have been affirmed for securities available under the existing shelf registration:
Everest Re Group, Ltd.—
- "a-"on senior unsecured
- "bbb+" on subordinated debt
- "bbb" on preferred stock
Everest Reinsurance Holdings, Inc.—
- "a-" on senior unsecured debt
- "bbb+" on subordinated debt
Everest Re Capital Trust III—(guaranteed by Everest Reinsurance Holdings, Inc.)
- "bbb+" on trust preferred securities
For Best's Credit Ratings, an overview of the rating process and rating methodologies, please visit Best's Ratings & Analysis.
The principal methodologies used in determining these ratings, including any additional methodologies and factors that may have been considered, can be found at Best's Credit Rating Methodology.
Founded in 1899, A.M. Best Company is a global full-service credit rating organization dedicated to serving the financial and health care service industries, including insurance companies, banks, hospitals and health care system providers.