Recently, A. M. Best Co. affirmed the issuer credit rating (:ICR) of RenaissanceRe Holdings Ltd. (RNR) at “a-.” All debt ratings of the company were also affirmed.
Further, the rating agency affirmed the financial strength rating (:FSR) and ICR of Renaissance Reinsurance Ltd. and Renaissance Reinsurance of Europe at “A+” and “aa-,” respectively. A. M. Best also affirmed the FSR and ICR of RenaissanceRe Specialty Risks Ltd. at “A” and “a,” respectively.
Moreover, the rating agency affirmed the FSR and ICR of DaVinci Reinsurance Ltd. at “A” and “a+,” respectively and the ICR of DaVinci Re Holdings Ltd. at “bbb+.” Further, A. M. Best assigned an FSR of “A” and an ICR of “a” to RenaissanceRe Specialty U.S. Ltd.
All the above-mentioned ratings of RenaissanceRe and its subsidiaries carry a stable outlook.
The rating affirmation was based on Renaissance Reinsurance’s strong risk-adjusted capitalization, large and capable management team, and the company’s profit-making ability over the long term. The company’s status as a leader in property catastrophe modeling and risk optimization also supports the ratings, partly offset by Renaissance Reinsurance’s high exposure to global catastrophe losses.
The rating affirmation of DaVinci Reinsurance was based on its strong operating results over the past few years, sustained sturdy risk-adjusted capitalization and its association with Renaissance Reinsurance. Further, the affirmation of RenaissanceRe Specialty U.S. was based on its admirable business plans, sturdy risk-adjusted capitalization, safety provided by internal reinsurance agreements and its association with Renaissance Reinsurance.
The ratings can be revised upward or the outlook can be altered to positive if Renaissance Reinsurance and the other companies continue to maintain above-average operating profitability and strong risk-adjusted capitalization over the long run.
Alternatively, the ratings may be revised downward or the outlook can be changed to negative if these companies witness weak operating results over the long term, significantly high catastrophe or investment losses compared to peers, substantial decline in the risk-adjusted capitalization, lower commitment from Renaissance Reinsurance or a substantial unfavorable development in loss reserve.
Rating affirmations or upgrades from credit rating agencies play an important part in retaining investor confidence in the stock as well as maintaining credit worthiness in the market. We believe that strong ratings will help RenaissanceRe retain investor confidence and help it write more businesses going forward, thereby boosting results.
RenaissanceRe carries a Zacks Rank #1 (Strong Buy). Other property and casualty insurers worth considering are MontpelierRe Holdings Ltd. (MRH), XL Group plc (XL) and Hilltop Holdings Inc. (HTH). All these companies carry a Zacks Rank #1 (Strong Buy).
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