Swiss Re’s ratings affirmed as AM Best cites strong balance sheet

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) for Swiss Reinsurance Company Ltd (Switzerland) and most of its rated operating affiliates, all subsidiaries of Swiss Re Ltd.

According to AM Best, Swiss Re’s ratings reflect its balance sheet strength, which is assessed as the strongest, along with strong operating performance, a favorable business profile, and robust enterprise risk management.

Swiss Re’s balance sheet strength is supported by its consolidated risk-adjusted capitalization, which comfortably exceeds AM Best’s minimum requirement for the strongest assessment level, as measured by Best’s Capital Adequacy Ratio (BCAR).

The assessment also factors in the company’s conservative asset allocation, strong asset-liability management, and low dependence on retrocession coverage. AM Best highlights that Swiss Re benefits from excellent financial flexibility, aided by effective capital management.

Swiss Re’s operating performance has consistently met expectations, with recent results reinforcing a strong performance assessment. The group reported a net profit of $2.1 billion in the first half of 2024, up from $1.8 billion in the prior year, reflecting improvements in underwriting, lower-than-expected natural catastrophe losses, and solid results from its Life and Health (L&H) Reinsurance division.

During the same period, the Corporate Solutions division recorded a combined ratio of 88.7%, while the Property and Casualty (P&C) Reinsurance division reported a combined ratio of 84.5%, despite continued reserve strengthening for U.S. casualty risks.

Moving forward, AM Best says that Swiss Re’s underwriting performance is expected to remain robust, driven by favorable market conditions and cycle management.

Swiss Re maintains a leading role in the global reinsurance market, supported by its strong brand and geographic diversification. AM Best notes that this diversification helps shield Swiss Re from competition in the international market and positions the company to manage the underwriting cycle effectively.

In addition, AM Best has maintained the under review with negative implications status for the FSR of A+ (Superior) and the long-term ICR of “aa” (Superior) for iptiQ Life S.A. (Luxembourg).

The same under review status applies to the FSR of A (Excellent) and long-term ICR of “a” (Excellent) for Lumico Life Insurance Company (Jefferson City, MO) and Elips Life Insurance Company (Jefferson City, MO). These ratings have been withdrawn at the companies’ request to discontinue participation in AM Best’s interactive rating process.

What are your thoughts on this story? Please feel free to share your comments below.