OLDWICK, N.J.–(BUSINESS WIRE)–AM Best has affirmed the Financial Strength Rating of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” of Validus Reinsurance, Ltd. (Validus Re) (Hamilton, Bermuda), and its affiliate, Validus Reinsurance (Switzerland) Ltd. (Zurich, Switzerland). The outlook of the Credit Ratings (ratings) are stable.
The ratings reflect Validus Re’s balance sheet strength, which AM Best categorizes as strongest, as well as its adequate operating performance, neutral business profile and appropriate enterprise risk management.
Validus Re’s balance sheet strength is supported by risk-adjusted capitalization at the strongest level, as measured by Best’s Capital Adequacy Ratio (BCAR), as well as a liquid investment portfolio of high quality assets. Furthermore, Validus Re has a history of conservative reserving. The group’s strongest level of capitalization allows it to absorb the catastrophe losses inherent in its businesses. Validus Re’s operating performance has been consistent over the cycle, driven by solid underwriting profits and stable investment returns. The company’s underwriting performance is supported by continued focus on underwriting profit, although volatility is expected during high catastrophe years. The group maintains a well-diversified business profile, focusing on reinsurance. Validus Re has developed, implemented and embedded a risk management framework that appropriately addresses the risks inherent in its profile, and its risk management capabilities generally meet or exceed its risk profile.
Partially offsetting these strengths are Validus Re’s exposure to high-severity events as a property catastrophe-focused reinsurer and the increased competition from capital markets in this space. In addition, any capital actions its parent, American International Group, Inc. (AIG), may take in the future could alter AM Best’s view of capital strength, as well as Validus’ ability to grow profitably. Currently, the company’s risk-adjusted capital remains at levels that have been stress tested to absorb significant catastrophe losses mitigating this concern.
This press release relates to Credit Ratings that have been published on AM 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 see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Understanding Best’s Credit Ratings. For information on the proper media use of Best’s Credit Ratings and AM Best press releases, please view Guide for Media – Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.
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