AM Best has concluded its review of both Validus Reinsurance entities, lifting the “under review” rating and affirming a financial strength rating of A (Excellent) and the long-term issuer credit ratings of “a” (Excellent) for both entities, with outlooks stable.
Validus Re, based in Hamilton, Bermuda, and Validus Reinsurance (Switzerland) (VRS) located in Zurich, Switzerland, are both part of the RenaissanceRe Holdings (RenRe Holdings) family, headquartered in Pembroke, Bermuda.
The acquisition of Validus Re and VRS by RenRe Holdings, as part of the acquisition of the treaty reinsurance business from American International Group (AIG), was completed in November 2023. The latest rating actions come after AM Best reviewed RenRe Holdings’ strategic plans for the integration and future operation of both entities.
A notable aspect of the integration is the significant de-risking of the underwriting portfolios of Validus Re and VRS. This strategy involves renewing their business with separate affiliates of RenRe Holdings and reducing exposure to legacy liabilities.
Reserve development cover is also in place, through which AIG retains 95% of both favorable and unfavorable reserve developments on business underwritten by Validus before its acquisition by RenRe Holdings.
The affirmation of the ratings by AM Best reflects the strong balance sheet of Validus Re and VRS, characterized as very strong by the agency, it said. Additionally, their operating performance was deemed adequate, with a business profile considered limited and enterprise risk management seen as appropriate. A significant factor in the ratings is the support from their ultimate parent, RenRe Holdings.
RenRe Holdings has established net worth maintenance agreements for both Validus Re and VRS, providing explicit support. This is in addition to the expected management of Validus’ balance sheets.
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