AM Best Revises Issuer Credit Rating Outlook to Stable for Swiss Reinsurance Company Ltd and Rated Affiliates

AM Best has revised the outlook to stable from negative for the Long-Term Issuer Credit Ratings (Long-Term ICRs) and affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICRs of "aa" (Superior) of Swiss Reinsurance Company Ltd (Switzerland) and its rated operating affiliates. The outlook of the FSR is stable.

The Credit Ratings (ratings) reflect Swiss Re Ltd's (Swiss Re) consolidated balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, very favourable business profile and very strong enterprise risk management.

The revision of the outlook for the Long-Term ICRs to stable from negative reflects sustained improvements in Swiss Re's underwriting results. The group has taken remedial actions in recent years to restore its technical performance, which include pruning of its Corporate Solutions book, a revised appetite for general liability classes in the United States and a significant reduction in capacity for frequency and aggregate natural catastrophe business. Hardening market conditions have contributed to the improving performance of the group's non-life segments. Additionally, the normalised performance of the group's life portfolio, excluding the impact of COVID-19, remained robust and the business reported profit in 2022 and the first half of 2023.

Overall, the group reported a strong net income of USD 1.4 billion in the first half of 2023 (compared with USD 157 million in the prior year), reflecting corrective underwriting actions taken in recent years, the relatively low incidence of natural catastrophe losses, and the performance of the life and heath book returning to pre-pandemic profit levels. In this period, the group reported solid combined ratios of 94.7% and 91.0% for its non-life divisions, P&C Reinsurance and Corporate Solutions, respectively. Prospectively, underwriting performance is expected to remain robust, supported by favourable market conditions and effective cycle management.

Swiss Re's balance sheet strength is underpinned by its risk-adjusted capitalisation that is comfortably in excess of AM Best's minimum requirement for the strongest assessment, as measured by Best's Capital Adequacy Ratio (BCAR). AM Best also considers the group's conservative asset allocation, strong asset liability management capabilities and low dependence on retrocession. In addition, Swiss Re's financial flexibility is excellent, supported by effective capital management.

Swiss Re maintains a leading position in the global reinsurance market. In AM Best's view, the group's strong brand and excellent geographic diversification partly insulate it from competition in the international reinsurance market and position it well to capitalise on improved reinsurance market conditions.

The FSR of A+ (Superior) and the Long-Term ICRs of "aa" (Superior) have been affirmed, with the outlooks of the Long-Term ICRs revised to stable from negative, while the outlook of the FSR is stable, of Swiss Reinsurance Company Ltd and its following affiliates:

• Swiss Re Asia Pte. Ltd.
• Swiss Re Europe S.A.
• Swiss Re International SE
• Swiss Re Life & Health America Inc.
• Swiss Reinsurance America Corporation
• Westport Insurance Corporation
• North American Capacity Insurance Company
• Swiss Re Corporate Solutions America Insurance Corporation
• Swiss Re Corporate Solutions Premier Insurance Corporation
• Swiss Re Corporate Solutions Elite Insurance Corporation
• Swiss Re Corporate Solutions Capacity Insurance Corporation
• iptiQ Life S.A.

The Long-Term ICR of "a" (Excellent) has been affirmed with the outlook revised to stable from negative for Swiss Re America Holding Corporation.

The following indicative Long-Term Issue Credit Ratings (Long-Term IRs) on securities available under Swiss Reinsurance Company Ltd's USD 10 billion debt issuance programme have been affirmed. The outlook on these Long-Term IRs is negative, reflecting an expected revision of the Swiss insurance law that is planned to be in effect from 1 January 2024. Subsequent to the change, senior debt holders will rank subordinate to reinsurance policyholders, whereas currently they rank pari passu. The negative outlook for these Long-Term IRs is unrelated to the rating fundamentals of Swiss Re. These issue ratings are likely to be downgraded by one notch when the change in law is enacted.

Swiss Reinsurance Company Ltd?
-- "aa" (Superior) on all senior unsecured notes to be issued under the programme
-- "aa-" (Superior) on all senior subordinated notes to be issued under the programme
-- "a+" (Excellent) on all junior subordinated notes to be issued under the programme

The following Long-Term IR has been affirmed with a negative outlook:

Swiss Re Treasury (US) Corporation (guaranteed by Swiss Reinsurance Company Ltd)?
-- "aa" (Superior) on USD 500 million 4.25% senior unsecured notes, due 2042

The following Long-Term IRs have been affirmed with the outlooks revised to stable from negative:

Swiss Re America Holding Corporation?
-- "a" (Excellent) on USD 600 million 7.00% senior unsecured notes, due 2026
-- "a" (Excellent) on USD 350 million 7.75% senior unsecured notes, due 2030

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 Performance Assessments, Best's Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best's Ratings & Assessments.

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