Bermudian firm’s insurance division under microscope
Rating agency AM Best has placed the A financial strength rating of Bermudian (re)insurer RenaissanceRe’s primary insurance division under review with negative implications.
The review was prompted by RenRe’s decision to sell certain of its US insurance operations to Australian insurance group QBE for $275m.
The transaction, announced yesterday, includes the US property/casualty business underwritten through managing general agents, its crop insurance business underwritten through Agro National and its commercial property insurance operation.
While the transaction comprises the bulk of RenRe’s insurance operations, the company will continue to underwrite US excess and surplus lines business through its Lloyd’s operation and Glencoe, its Bermuda-domiciled insurer.
AM Best said the review would be resolved once the transaction has closed and the agency completes its analysis.
As part of the analysis of the entities being sold, AM Best will consider the strategic importance, integration plan and any explicit support to be provided by QBE going forward. Similarly, for Glencoe, which will be retained, the strategic importance and any explicit support to be provided by RenaissanceRe Holdings Ltd. will be considered, AM Best said.
The transaction is scheduled to complete in March 2011.
The entities included in the rating review are Glencoe Insurance, Stonington Insurance Company, Lantana Insurance and Stonington Lloyds Insurance Company.
Meanwhile, rival rating agency Moody’s has affirmed RenRe’s financial strength ratings following the sale announcement.
"The sale of these insurance operations will allow RenRe to exit a subscale business that was less of a cultural fit, and with negligible impact to its balance sheet," said Kevin Lee, senior credit officer at Moody's, in a statement.