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FOR IMMEDIATE RELEASE
AMSTERDAM - JULY 28, 2021 09:12 AM (EDT)
AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating (Long-Term ICR) of “aa” (Superior) of Caisse Centrale de Réassurance (CCR) (France). Concurrently, AM Best has affirmed the FSR of A (Excellent) and the Long-Term ICR of “a” (Excellent) of CCR RE (France). The outlook of these Credit Ratings (ratings) is stable.
The ratings of CCR reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, favourable business profile and appropriate enterprise risk management (ERM). The ratings also consider, in the form of rating lift, the explicit unlimited guarantee provided by the Republic of France to CCR’s state-backed business.
CCR’s balance sheet strength assessment reflects the company’s strongest level of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy Ratio (BCAR). CCR’s capital position is supported by significant equalisation and special reserves, which provide capacity to absorb potential losses from its peak exposures to natural catastrophe, terrorism and other exceptional risks. The balance sheet strength assessment also reflects CCR’s high quality, liquid investment portfolio and conservative reserving practices.
AM Best considers CCR’s long-term operating performance track record to be adequate. Results are subject to volatility given the nature of business written; however, the company has established significant equalisation reserves, which can be released in loss-heavy years. Losses have trended higher in recent years, driven by weather-related natural catastrophe events, translating to an average loss ratio of 107% for the five-year period ending in 2020 (as calculated by AM Best, before movement in the equalisation reserve).
CCR’s favourable business profile assessment reflects the company’s role in France’s public reinsurance regime and its unique position as the principal reinsurer of natural catastrophe risks underwritten in the country, with an estimated market share of over 90%. AM Best considers CCR’s market offering of a 50% quota share, supplemented by an optional, unlimited stop loss treaty, to be a competitive advantage.
The ratings of CCR RE reflect its balance sheet strength, which AM Best assesses as very strong, as well as its adequate operating performance, neutral business profile and appropriate ERM. The ratings also consider, in the form of rating lift, the strategic importance of CCR RE to CCR.
CCR RE’s balance sheet strength assessment reflects its strongest risk-adjusted capitalisation, as measured by BCAR. The assessment also factors in the company’s low dependence on reinsurance, conservative reserving practices, and its liquid and high quality investment portfolio. CCR RE’s standalone financial flexibility was demonstrated by the issuance of EUR 300 million of subordinated debt in July 2020. However, financial flexibility remains constrained by the clear segregation of activities and capital between CCR and CCR RE.
CCR RE has been profitable since its creation as a stand-alone company in 2016, driven by the strong performance of the company’s life reinsurance portfolio and by investment results supported by realised gains. Non-life technical performance has improved since 2016, as the company re-calibrated its underwriting portfolio. AM Best expects this improvement to be maintained despite the return to top-line growth.
CCR RE has an established presence in the international reinsurance market, writing a well-diversified underwriting portfolio and benefiting from the long-established CCR brand.
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 Guide to Best’s Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
AM Best is a global credit rating agency, news publisher and data analytics provider specialising in the insurance industry. Headquartered in the United States, the company does business in over 100 countries with regional offices in London, Amsterdam, Dubai, Hong Kong, Singapore and Mexico City.