Best Affirms RenRe and Subs ‘A+’ Ratings; Glencoe Raised to ‘A’

January 30, 2009

A.M. Best Co. has affirmed the financial strength rating (FSR) of ‘A+’ (Superior) and issuer credit ratings (ICR) of “aa-” of Bermuda-based Renaissance Reinsurance Ltd. (RenRe) and Dublin-based Renaissance Reinsurance of Europe. Best also affirmed the
ICR of “a-” and all debt ratings of RenaissanceRe Holdings Ltd. (RenaissanceRe).

In addition Best upgraded the FSR to ‘A’ (Excellent) from ‘A-‘ (Excellent) and ICRs to “a” from “a-” for the Glencoe Group and its members, and affirmed the FSR of ‘A’ (Excellent) and ICR of “a” on DaVinci Reinsurance Ltd.

The outlook for all of these ratings is stable, including Glencoe Group, which Best has revised to stable from positive. All companies above are domiciled in Hamilton, Bermuda, except where specified.

“The rating actions on RenRe reflect its continued superior risk-based level of capitalization and historically excellent underwriting track record, which is fully supported by outstanding risk management techniques,” said Best. “The ratings also reflect RenRe’s superior market reputation as a leader in state-of-the-art property catastrophe modeling and risk optimization. This reputation has attracted capital from outside companies to form several successful joint ventures including DaVinci and Top Layer Reinsurance Ltd. (See “ratings” article).

Best also noted that “RenRe’s operating performance through September 30, 2008 resulted in a 92 percent combined ratio, placing it above the average performance of its Bermuda peer group. The September 30, 2008 results also include $276 million of net losses attributable to Hurricanes Ike and Gustav. However, overall results were affected by investment losses attributable to the current crisis in the financial markets despite maintaining a portfolio of predominately highly rated fixed income investments.”

The Glencoe Group is a RenRe affiliate that provides specialty and individual risk direct insurance and quota share reinsurance to the U.S. market. Best said it had upgraded the Group’s ratings “based on its successful growth in lines of business to less volatile lines, primarily multi-peril crop, commercial multi-line and commercial property business.” In addition Glencoe receives reinsurance support provided by RenRe. “The combination of the change in market strategy and Glencoe Group’s strong risk management controls has led to three consecutive years of combined ratios below 100 percent,” Best noted.

However, the rating agency said that “RenRe’s exposure to high severity losses associated with catastrophic events on a worldwide basis as well as exposure to investment losses due to the current credit crisis,” should be considered as “offsetting factors.” But these in turn are “greatly mitigated by RenaissanceRe’s disciplined and analytical underwriting approach, sophisticated catastrophe modeling capabilities and active monitoring controls over both reserves and investments,” Best added.

A summary of the ratings is as follows:
The FSR of ‘A+’ (Superior) and ICRs of “aa-” have been affirmed for
Renaissance Reinsurance Ltd. and Renaissance Reinsurance of Europe.

The FSR has been upgraded to ‘A’ (Excellent) from ‘A-‘ (Excellent) and the ICRs
to “a” from “a-” for the Glencoe Group and its following members:
— Glencoe Insurance Ltd.
— Stonington Insurance Company
— Lantana Insurance Ltd.
— Stonington Lloyds Insurance Company

The FSR of ‘A’ (Excellent) and ICR of “a” have been affirmed for DaVinci Reinsurance Ltd.).
The ICR of “bbb” has been affirmed for DaVinci Re Holdings Ltd.

The ICR of “a-” has been affirmed for RenaissanceRe Holdings Ltd.

The following debt ratings have been affirmed:
RenaissanceRe Holdings Ltd.—
— “a-” on $100 million 5.875 percent senior unsecured notes, due 2013
— “bbb” on $100 million 7.30 percent Series B perpetual preferred stock
— “bbb” on $250 million 6.08 percent Series C perpetual preferred stock
— “bbb” on $300 million 6.6 percent Series D perpetual preferred stock

The following indicative shelf debt ratings have been affirmed:
RenaissanceRe Holdings Ltd.—
— “a-” on senior unsecured
— “bbb+” on subordinated
— “bbb” on preferred stock

RenaissanceRe Capital Trust II—
— “bbb” on trust preferred securities

Source: A.M. Best –

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