LONDON–(BUSINESS WIRE)–A.M. Best has downgraded the Long-Term Issuer Credit Rating
(Long-Term ICR) to “aa-” from “aa” and affirmed the Financial Strength
Rating (FSR) of A+ (Superior) of Intercona Re AG (Intercona)
(Switzerland). The outlook of these Credit Ratings (rating) is stable.
The ratings reflect Intercona’s balance sheet strength, which A.M. Best
categorises as strongest, as well as its strong operating performance,
neutral business profile and appropriate enterprise risk management
The downgrade reflects the weakened financial strength of the company’s
ultimate parent, Nestlé S.A. (Nestlé), following changes in the group’s
capital structure. Intercona’s ratings reflect its importance to Nestlé,
a leading global food and beverage company, and its high level of
integration within the group’s risk management function.
Intercona’s balance sheet strength is underpinned by the strongest level
of risk-adjusted capitalisation, as measured by Best’s Capital Adequacy
Ratio. The balance sheet strength assessment benefits from a positive
assessment of the holding company, reflecting Nestlé’s stronger credit
profile. Intercona’s adequate liquidity and capital buffers built up
through the retention of earnings within its equalisation and
fluctuation reserves further support its balance sheet strength.
The company’s strong operating performance and ability to withstand
volatility from large loss events is evidenced through a five-year
average (2013-2017) combined ratio of 90.0%. Intercona’s disciplined
underwriting enabled the company to report pre-tax profits of CHF 77.1
million (excluding movement of equalisation and fluctuation reserves) in
2017, following a financial year loss of CHF 49.2 million in 2016,
primarily driven by a natural catastrophe loss.
Intercona’s business profile assessment reflects its role as the captive
reinsurer of Nestlé. Intercona provides the first layer of reinsurance
protection on the group’s global insurance programme, providing a
diverse underwriting portfolio by geography and product. Intercona is a
key part of its parent’s overall risk management framework, assisting
with the mitigation of risk exposures and loss prevention.
A.M. Best remains the leading rating agency of alternative risk
transfer entities, with more than 200 such vehicles rated throughout the
world. For current Best’s Credit Ratings and independent data on the
captive and alternative risk transfer insurance market, please visit www.ambest.com/captive.
This press release relates to Credit Ratings that have been published
on A.M. 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 A.M. Best’s Recent
Rating Activity web page. For additional information
regarding the use and limitations of Credit Rating opinions, please view Understanding
Best’s Credit Ratings. For information on the proper media
use of Best’s Credit Ratings and A.M. Best press releases, please view Guide
for Media – Proper Use of Best’s Credit Ratings and A.M. Best Rating
Action Press Releases.
A.M. Best is a global rating agency and information provider with a
unique focus on the insurance industry. Visit www.ambest.com
for more information.
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