Best Affirms ‘A’ Rating of France’s Caisse Centrale de Reassurance

A.M. Best Co. announced that it has affirmed the ‘A’ (Excellent) financial strength rating of Caisse Centrale de Reassurance (CCR), a Paris based reinsurer, with a “positive” outlook.

“The rating reflects the company’s superior risk-based capitalisation, its leading position in the domestic (state guaranteed) catastrophe reinsurance sector and the excellent underwriting performance in this segment,” said Best. “The main offsetting factor is the historically weak operating result of its traditional (non-guaranteed) book of business; but its recent and projected improvement has lead to a change of the outlook from stable to positive.”

Best noted that “On a risk-adjusted basis, CCR has a superior capital base benefiting from another year of robust retained earnings. In addition, CCR further increased its 2002 equalisation reserves by a substantial EUR 224 million (USD 259 million), and A.M. Best expects a further strengthening in 2003. The French government provides unlimited guarantee for natural catastrophe and terrorism risks by securing the company’s equalisation reserves.”

It also described CCR as “the only French reinsurer providing unlimited cover for catastrophe perils, supported by the unlimited guarantee of the French government.” The company also writes life and non-life reinsurance in the open market (36% of total gross premium), both in France and other European countries, and has plans to “further expand its open market business.”

“Despite the inherent volatility of its catastrophe risk portfolio, CCR achieved an excellent combined ratio of 55.8% in 2002, down from 56.7% in 2001,” said Best. “Underwriting results of its open market reinsurance book are improving, with a 3.3% fall in combined ratio to 117.6% at year end 2002.” Best said it “expects this improvement to continue in 2003 and 2004 as a result of selective underwriting and the withdrawal from unprofitable risks, bringing greater stability to bottom line results.”