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FOR IMMEDIATE RELEASE
OLDWICK - SEPTEMBER 09, 2015 04:01 PM (EDT)
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 affirmed the issue 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 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 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 line with its peer group despite the current competitive reinsurance market environment.
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 modeling capabilities.
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 $417 million as of June 30, 2015. A&E reserves are monitored on a quarterly basis against emerging trends and adjustments are made when necessary. Mt. McKinley Insurance Company, the Everest Re subsidiary that housed a portion of these reserves, was sold in July 2015.
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 the maintenance of 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 insurance subsidiaries:
The following issue rating has been affirmed:
Everest Reinsurance Holdings, Inc.—
—"a-" on $400 million 4.868% fixed senior unsecured notes, due 2044
— "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 registration:
Everest Re Group, Ltd.—
— "a-" on senior unsecured debt
— "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
This press release relates to rating(s) that have been published on A.M. Best's website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please visit A.M. Best's Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source.