A.M. Best has removed from under review with negative implications and affirmed the financial strength rating (FSR) of A+ (Superior) and the issuer credit ratings (ICR) of "aa-" of Renaissance Reinsurance Ltd. (RenRe) and Renaissance Reinsurance of Europe (Dublin, Ireland). A.M. Best also has removed from under review with negative implications and affirmed the ICR of "a-" and all debt ratings of RenaissanceRe Holdings Ltd. (RenaissanceRe) [NYSE: RNR]. All aforementioned ratings have been assigned a negative outlook. A.M. Best has also removed from under review with negative implications and affirmed the FSR of A (Excellent) and the ICR of "a+" of DaVinci Reinsurance Ltd. (DaVinci), as well as the ICR of "bbb+" of DaVinci Re Holdings Ltd. The outlook assigned to the ICRs of DaVinci and DaVinci Re Holdings Ltd.is negative while a stable outlook has been assigned to DaVinci's FSR. Concurrently, A.M. Best has removed from under review with negative implications and affirmed the FSR of A (Excellent) and the ICRs of "a" of RenaissanceRe Specialty Risks Ltd. (RenRe Specialty Risks) and RenaissanceRe Specialty U.S. Ltd. (RenRe Specialty US). The outlook assigned to these ratings is stable. All aforementioned companies are domiciled in Bermuda unless otherwise specified. (See below for a detailed listing of the debt ratings.) Furthermore, A.M. Best has removed from under review with developing implications and affirmed the FSR of A (Excellent) and the ICRs of "a" of Platinum Underwriters Bermuda, Ltd. (Bermuda) and Platinum Underwriters Reinsurance, Inc. (Maryland) (collectively referred to as Platinum). The outlook assigned to the FSR of Platinum is stable while the outlook assigned to the ICRs is positive. The rating actions reflect RenRe's superior level of risk-based capitalization, the strength and depth of its management team and the ability of the company to deliver strong long-term profitability over the course of the insurance cycle. The company is widely recognized for its thoughtful leadership in enterprise risk management (ERM) and as a pioneer in third-party capital management. In that regard, RenRe maintains its superior market reputation as a leader in state-of-the-art property catastrophe modeling and risk optimization, which has attracted capital from outside investors to form several successful joint ventures, including DaVinci and Top Layer Reinsurance Ltd. (Hamilton, Bermuda). The ratings of DaVinci recognize its solid operating performance over the last several years and the maintenance of its strong risk-adjusted capitalization. DaVinci's profile is enhanced due to its affiliation with RenRe.
The ratings of RenRe Specialty Risks and RenRe Specialty US acknowledge their strong risk-adjusted capitalization, sound business plans and strategic business positioning for writing specialty risks. The ratings are enhanced based on implicit and explicit support. In addition, RenRe Specialty Risks' and RenRe Specialty US' profiles are enhanced due to their affiliation and branding as RenRe companies.Offsetting these strengths is that as an organization, RenRe is exposed to high severity losses associated with catastrophic events on a worldwide basis. The reinsurance market, and in particular, the property catastrophe reinsurance segment, is experiencing what appears to be a secular change. Alternative capital has become a market participant and likely will continue to target the property catastrophe reinsurance market, with an appetite to write business at lower yields. The negative outlook assigned to the ICRs of RenRe and DaVinci reflect adverse market conditions among specialized property catastrophe reinsurance companies. Given the pricing pressure due to the overflow of alternative capital and increased retentions of primary companies, profit margins are being compressed. This pressure rationalizes the acquisition of Platinum from an overall strategic perspective. The positive outlook assigned to Platinum reflects that these entities are now part of larger organization with greater scale and broader strategic options. Factors that could lead to positive rating actions or an upward revision of the outlook include continued, long-term favorable operating profitability relative to the companies' peers, maintenance of strong risk-adjusted capital levels and overall improved market conditions. Factors that could cause negative rating actions or a downward revision of the outlook include unfavorable operating profitability trends, outsized catastrophe or investment losses relative to peers, which also may fall outside of A.M. Best's expectations and result in an alternate view of ERM, a decline in the level of parental or organizational commitment, significant adverse loss reserve development and a material decline in risk-adjusted capitalization.
The following debt ratings have been affirmed and assigned a negative outlook:RenaissanceRe Holdings Ltd.— -- "bbb" on $250 million 6.08% Series C perpetual preferred stock -- "bbb" on $275 million 5.375% Series E perpetual preferred stock RenaissanceRe North America Holdings Inc. (guaranteed by RenaissanceRe Holdings Ltd.) — -- "a-" on $250 million 5.75% senior unsecured notes, due 2020 The following debt ratings have been upgraded and assigned a negative outlook: Platinum Underwriters Finance Inc. (guaranteed by RenaissanceRe Holdings Ltd.) — -- "a-" on $250 million 7.5% senior unsecured notes, due 2017 The following debt ratings have been assigned with a negative outlook: RenaissanceRe Finance Inc. (guaranteed by RenaissanceRe Holdings Ltd.) — -- "a-" on $300 million 3.7% senior unsecured notes, due 2025 The following indicative shelf debt ratings have been affirmed and assigned a negative outlook: RenaissanceRe Holdings Ltd.— -- "a-" on senior unsecured -- "bbb+" on subordinated -- "bbb" on preferred stock RenaissanceRe Capital Trust II— -- "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. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology. Key insurance criteria reports utilized:
- Analyzing Insurance Holding Company Liquidity
- Catastrophe Analysis in A.M. Best Ratings
- Rating Members of Insurance Groups
- Risk Management and the Rating Process for Insurance Companies
- Understanding BCAR for Property/Casualty Insurers
- Understanding Universal BCAR
- Rating New Company Formations
- Equity Credit for Hybrid Securities
- Insurance Holding Company and Debt Ratings