2014-04-25 16:04:01 -
A.M. Best has revised the outlook to stable from negative and affirmed the financial strength rating of A++ (Superior) and issuer credit rating of “aa+” of Caisse Centrale de Réassurance (CCR) (France).
The ratings reflect CCR’s superior risk-adjusted capitalisation, strong operating performance and excellent business profile in France. The ratings also factor in the explicit unlimited guarantee provided by the Republic of France to CCR’s state-backed business. The revised outlook reflects the stabilising economic conditions within France.
CCR’s risk-adjusted capitalisation remains very strong, supported by a conservative earnings retention policy and the backing of the Republic of France. CCR offers reinsurance coverage for natural catastrophe, terrorism and other exceptional risks with the explicit support of the French state, its sole shareholder, in
the form of unlimited stop-loss reinsurance. Additionally, the company writes traditional reinsurance business not covered by the French state’s stop-loss guarantee, which accounted for approximately one-third of the gross premiums written in 2013.
CCR recorded a net profit of EUR 210 million in 2013, stemming from solid technical performance and an investment return of 2.4%. The state-backed reinsurance business contributed a net profit of EUR 174 million, mainly affected by the floods in Lourdes and the adverse development of drought claims from 2011 partly arising from more towns being recognised as affected by the event. Gross written premiums for the open market business were cut by 19% to EUR 418 million in 2013, as the company pursued the restructuring of its portfolio initiated in January 2012. Overall CCR produced a strong net combined ratio of 78% for 2013, against 88% in 2012.
CCR maintains a unique position as the main reinsurer of natural catastrophe risks underwritten in France with an estimated market share of 90%. The company is expected to retain its strategic importance to the French state as a provider of reinsurance for risks typically considered uninsurable. CCR should also maintain a good profile in the open market, although this portfolio of business will continue to be incidental to its main strategic mission.
Downward or upward rating actions will likely move in line with A.M.
Best’s assessment of the economic conditions in France. Negative rating actions could also occur if the level of explicit support by the French state were to change.
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 : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
In accordance with Regulation (EC) No. 1060/2009, the following is a link to required disclosures: A.M.
Best Europe - Rating Services Limited Supplementary Disclosure : cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww ..
This rating announcement has been issued by A.M. Best Europe – Rating Services Limited, which is a subsidiary of A.M. Best Company.
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