Somewhat offsetting these positive rating factors are 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 both a probable maximum loss (PML) 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 $480 million, which has been declining in recent years. A&E reserves are monitored on a quarterly basis against emerging trends with the most recent review indicating that current reserve levels are adequate.Rating factors that could lead to a positive outlook and/or rating upgrades include the continuation of Everest Re’s long-term, consistently strong operating profitability relative to its peers as well as maintaining strong risk-adjusted capital levels. Rating factors that could lead to a revised outlook to negative and/or a downgrading of the company’s ratings include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to peers and/or A.M. Best’s expectations, significant adverse loss reserve development and/or a material decline in its risk-adjusted capital. The FSRs of A+ (Superior) and ICRs of “aa-” have been affirmed for Everest Reinsurance (Bermuda) Ltd. and its following reinsurance and insurance subsidiaries:
- Everest Reinsurance Company
- Everest International Reinsurance, Ltd.
- Everest Reinsurance Company (Ireland), Limited
- Everest National Insurance Company
- Everest Indemnity Insurance Company
- Everest Security Insurance Company
- Everest Insurance Company Canada
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 The methodology used in determining these ratings is Best’s Credit Rating Methodology , which provides a comprehensive explanation of A.M. Best’s rating process and contains the different rating criteria employed in the rating process. Key criteria utilized include: “Risk Management and the Rating Process for Insurance Companies”; “Rating Members of Insurance Groups”; “Insurance Holding Company and Debt Ratings”; “Understanding BCAR for Canadian Property/Casualty Insurers”; “Understanding BCAR for Property/Casualty Insurers”; “Understanding Universal BCAR”; and “Catastrophe Analysis in A.M. Best Ratings.” Best’s Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Founded in 1899, A.M. Best Company is the world’s oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com. Copyright © 2012 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.