New York, June 01, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entity(entities) listed below.
The review was conducted through a portfolio review discussion held on 25 May 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.
This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.
Key Rating Considerations
The principal methodology used for these rated entities was Reinsurers Methodology published in November 2019. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Reinsurers Methodology
Market Position, Brand and Distribution: Market position, brand and distribution are key factors representing a company's ability to develop and sustain competitive advantages in its chosen markets. Metrics can include but are not limited to relative market share, proportion of premiums written directly, average line size, and number of lead positions.
Business and Geographic Diversification: A company's chosen business lines have a major influence on its risk profile and creditworthiness because business classes have distinct volatility and competitive attributes. Metrics can include but are not limited to product line and geographic diversification, and relative volatility of product lines.
Asset Quality: Reinsurer's mainly invest in high-quality liquid assets, given the uncertain timing and magnitude of their liability payments, although companies often allocate a portion of their investments to higher-risk assets. Metrics can include but are not limited to high-risk assets, reinsurance recoverables and goodwill & intangibles as percentages of equity, as well as investment concentrations and portfolio liquidity.
Capital Adequacy: A reinsurer's capital adequacy determines the extent to which it can absorb losses stemming from business and financial risks, including from stress scenarios. Metrics can include but are not limited to gross underwriting leverage, gross and net natural catastrophe exposures as percentages of equity, regulatory capital ratios, and reinsurers' own capital adequacy metrics.
Profitability: A reinsurer's earnings capacity, including earnings quality and sustainability, shows how readily it can meet policy and other financial obligations and generate capital internally. Metrics can include but are not limited to combined underwriting ratio, return on capital, return on equity, return on revenue, and volatility of such returns.
Reserve Adequacy: Our estimate of the redundancy or deficiency of a reinsurer's loss and loss adjustment expense reserves helps shape our assessment of its reported earnings and capitalization. Metrics can include but are not limited to yearly and weighted average loss development as a percentage of reserves, funding ratio of latent liabilities, and various actuarial estimates.
Financial Flexibility: Reinsurers benefit from the ability to raise capital externally for growth or acquisitions or to meet unexpected financial demands. Metrics can include but are not limited to adjusted financial leverage, total leverage, and earnings coverage, as well as holding company liquidity and access to committed credit facilities.
Other Rating Considerations: In addition to the factors discussed above, other factors such as management, enterprise risk, accounting policies and disclosures, sovereign and regulatory environment, and explicit or implicit support can affect the insurance financial strength ratings of insurance operating companies.
Instrument Notching Considerations: The ratings for debt and preferred stock instruments issued by insurance firms are generally notched down from the insurance financial strength ratings based on the issuing entity, jurisdiction, seniority, collateral, and other features of the instruments.
• Al Ahleia Insurance Co. (S.A.K.P.)
• Alleghany Corporation
• Allied World Assurance Company Hlds I, Ltd
• Arch Capital Group Ltd.
• Arrow Reinsurance Company, Limited
• Aspen Insurance Holdings Limited
• AXIS Capital Holdings Limited
• Berkshire Hathaway Inc.
• DaVinciRe Holdings Ltd.
• Everest Reinsurance (Bermuda), Ltd.
• Lancashire Holdings Ltd.
• Lloyd's Syndicate 2001
• MS Amlin AG
• Munich Reinsurance Company
• Namibia National Reinsurance Corp Limited
• Odyssey Reinsurance Company
• Oil Insurance Limited
• PartnerRe Ltd.
• Peak Reinsurance Company Ltd.
• PICC Reinsurance Company Limited
• Reinsurance Group of America, Inc.
• RenaissanceRe Holdings Ltd.
• Resolution Re Ltd.
• Rivoli Reinsurance Company
• Saudi Reinsurance Company
• SCOR SE
• Sompo International Holdings Ltd.
• Sura Re Ltd.
• Swiss Re Ltd.
• XL Bermuda Ltd
The principal methodology used for these rated entities was Property and Casualty Insurers Methodology published in September 2021. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Property and Casualty Insurers Methodology
Market Position, Brand and Distribution: Market position, brand and distribution are key factors representing a company's ability to develop and sustain competitive advantages in its chosen markets. Metrics can include but are not limited to relative market share, underwriting expense ratio, and diversity of distribution channels.
Product Focus and Diversification: A company's chosen business lines have a major influence on its risk profile and creditworthiness because business classes have distinct volatility and competitive attributes. Metrics can include but are not limited to product line and geographic diversification, relative volatility of product lines, and breadth and depth of markets served.
Asset Quality: P&C insurers mainly invest in high-quality liquid assets, given the uncertain timing and magnitude of their liability payments, although companies often allocate a portion of their investments to higher-risk assets. Metrics can include but are not limited to high-risk assets, reinsurance recoverables and goodwill & intangibles as percentages of equity, as well as investment concentrations and portfolio liquidity.
Capital Adequacy: An insurer's capital adequacy determines the extent to which it can absorb losses stemming from business and financial risks, including from stress scenarios. Metrics can include but are not limited to gross underwriting leverage, regulatory capital ratios, insurers' own capital adequacy metrics, and output from Moody's Capital Tool.
Profitability: An insurer's earnings capacity, including earnings quality and sustainability, shows how readily it can meet policy and other financial obligations and generate capital internally. Metrics can include but are not limited to combined underwriting ratio, return on capital, return on equity, return on revenue, and volatility of such returns.
Reserve Adequacy: Our estimate of the redundancy or deficiency of an insurer's loss and loss adjustment expense reserves helps shape our assessment of its reported earnings and capitalization. Metrics can include but are not limited to yearly and weighted average loss development as a percentage of reserves, funding ratio of latent liabilities, and various actuarial estimates.
Financial Flexibility: Insurers benefit from the ability to raise capital externally for growth or acquisitions or to meet unexpected financial demands. Metrics can include but are not limited to adjusted financial leverage, total leverage, earnings coverage, and cash flow coverage, as well as holding company liquidity and access to committed credit facilities.
Other Rating Considerations: In addition to the factors discussed above, other factors such as management, enterprise risk, accounting policies and disclosures, sovereign and regulatory environment, and explicit or implicit support can affect the insurance financial strength ratings of insurance operating companies.
Instrument Notching Considerations: The ratings for debt and preferred stock instruments issued by insurance firms are generally notched down from the insurance financial strength ratings based on the issuing entity, jurisdiction, seniority, collateral, and other features of the instruments.
• Alleghany Corporation
• Berkshire Hathaway Inc.
• Swiss Re International SE
• Westport Insurance Corporation
The principal methodology used for these rated entities was Government-Related Issuers Methodology published in February 2020. Please see the Rating Methodologies page on https://ratings.moodys.com for a copy of this methodology.
Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.
Government-Related Issuers Methodology
Assigning a Baseline Credit Assessment (BCA): The majority of Government-Related Issuers (GRIs) begin with an assessment of the GRI's standalone strength (i.e. BCA) – its ability to service and repay outstanding debt without recourse to extraordinary support from the supporting government - using the published sector-specific methodology that is most suitable for the predominant activities of the GRI. Our assessment of standalone strength includes any day-to-day support received from the government that can be clearly distinguished from extraordinary support. Support mechanisms, such as an obligation of the government to ensure the GRI's solvency and liquidity, are reflected in the BCA when they are legally or contractually documented.
Government uplift: The GRI's ratings include any uplift due to systemic support and typically focus on three structural factors and three factors explaining the level of the government's willingness to provide support. Structural factors address the legal and quasi-legal aspects of the government's relationship with the GRI and include: (1) guarantees, (2) ownership level and (3) barriers to support. The factors underlying willingness consider the softer connections between the two entities and include (4) the likelihood of government intervention, (5) political linkages and (6) economic importance. Support is determined using a joint default analysis framework which considers an estimate of the likelihood of extraordinary support, an assessment of the credit quality of the supporting government, and default correlation between the two entities.
GRIs without a BCA: In limited instances, it is not possible or meaningful to assign a BCA. The GRI is so inextricably linked to the government that a meaningful standalone BCA cannot be derived. In such cases, a top-down analytical approach is used that chiefly considers the ability and willingness of the government to provide timely support, instead of the usual bottom-up approach of starting with the BCA and then considering uplift towards the government's rating.
• Namibia National Reinsurance Corp Limited
• PICC Reinsurance Company Limited
This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.
Please see the Issuer page on https://ratings.moodys.com for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.
This publication does not announce a credit rating action.
For any credit ratings referenced in this publication, please see the issuer/deal page on https://ratings.moodys.com
for the most updated credit rating action information and rating history.
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