Ratings are based on performance since AXA’s decision to place the companies into run off, says AM Best

AM Best has affirmed the financial strength rating (FSR) of B++ (Good) and the issuer credit ratings (ICR) of “bbb” of AXA Corporate Solutions Reinsurance Company (AXA CS Re) and its subsidiary, AXA Corporate Solutions Life Reinsurance (AXA CS Life).

Additionally, AM Best has affirmed the FSR of B++ (Good) and assigned an ICR of “bbb” to AXA CS Re’s other subsidiary, AXA Re Property and Casualty Insurance Company (AXA Re P&C). The outlook for all ratings is stable.

The ratings are based on AXA CS Re and its subsidiaries’ adequate risk-adjusted capitalisation and operating performance since the AXA group’s decision to place the companies into run off.

The ratings also recognise the companies’ conservative investment portfolios and favourable liquidity.

Partially offsetting these positive rating factors are the variability in the companies’ operating performances and surplus levels and the uncertainties associated with the run off of the long-tail reinsurance business.

AXA CS Re has experienced sizeable unrealised capital gains and losses largely attributable to AXA CS Life’s exposure to the equity markets and the reinsurance of guaranteed minimum death benefit and guaranteed minimum income benefit products.

However, the losses were largely offset by capital infusions from the AXA group by means of surplus notes, and the AXA group has committed to supporting these operations with additional funding, as needed.

AXA Re P&C has experienced significant operating losses and a decline in surplus over the last five years due to its run-off strategy and exposure to Florida hurricanes.

Nevertheless, it benefits from strong reinsurance protection from its parent, and its risk-adjusted capitalisation remains adequate.