Best Affirms IPCRe Group ‘A+’ Ratings

A.M. Best Co. announced that it has affirmed the financial strength ratings of “A+” (Superior) of the Bermuda-based IPCRe Group (IPCRe) and its affiliated companies. Concurrently, Best said it has assigned issuer credit ratings of “aa-” to IPCRe Limited (Bermuda) and IPCRe Europe Limited (Ireland). All ratings have a stable outlook.

“The ratings reflect IPCRe’s superior risk-adjusted capitalization, excellent historical earnings and well established market presence within the global property catastrophe reinsurance market,” Best said. “The ratings also acknowledge IPCRe’s highly experienced management team, prudent risk management strategies and customer-oriented focus. Due to management’s strong capabilities, the company has withstood volatility in operating performance over time, stemming from high severity catastrophic activity from 1998 through 2001 and through the extraordinary hurricane activity during the third quarter of 2004.”

Best explained that in order to “minimize the impact from catastrophic events, IPCRe management carefully monitors aggregate accumulations with the maximum allowable exposure in any single geographic zone limited to a preset percentage of capital established by its Board of Directors. This capital-based limits approach diversifies the company’s exposure around the world and achieves an optimal spread of risk.”

Best also noted that IPCRe’s ratings consider the advantages the company “derives through strategic relationships with affiliates of its original sponsor and largest shareholder, American International Group Inc. AIG affiliates provide administrative and back-office functions in addition to investment portfolio management services.

“Partially offsetting these positive rating factors are the increasing availability of reinsurance capacity in the property catastrophe reinsurance market and IPCRe’s focused risk profile, which may pressure future operating performance. These concerns are mitigated by IPCRe’s unencumbered balance sheet supported by an investment portfolio with over $1.8 billion of invested assets that are conservatively managed to ensure adequate liquidity and preservation of capital.

“Furthermore, IPCRe consistently records strong operating cash flows, which are supplemented by the availability of a $200 million revolving credit facility and enhances financial flexibility.”