September 29, 2020
Moody’s Investors Service (“Moody’s”) has affirmed the A1 insurance financial strength (IFS) rating of Everest Reinsurance Company and Everest Re (Bermuda), Ltd., as well as the Baa1 senior debt rating of Everest Reinsurance Holdings, Inc. These entities are wholly owned by Everest Re Group, Ltd. (NYSE: Re, Everest Re). In the same rating action, Moody’s has also assigned provisional ratings to the shelf registration (see list below) of Everest Reinsurance Holdings, Inc. The rating outlook for Everest Re is stable.
RATINGS RATIONALE
For Everest Re and other reinsurers, the coronavirus-related economic downturn is raising claim costs in certain business lines and adding volatility to investment performance and capital levels. For the first six months of 2020, Everest Re reported net income of $207 million, down from $687 million in the prior year period reflecting lower net investment income, net realized investment losses and $310 million of pretax coronavirus-related losses. The losses were primarily attributable to event cancellation, business interruption, accident & health and workers’ compensation, mostly from its reinsurance business. Everest Re generated an underwriting profit for the first six months of 2020 reporting a combined ratio of 98.1%.
The stable rating outlook reflects Moody’s expectation that Everest Re will prudently manage its aggregate property catastrophe exposures through improved risk mitigation, stricter terms and conditions and rate increases while maintaining good capital adequacy and strong liquidity as it navigates that pandemic-related economic downturn.
The Baa1 senior debt rating of Everest Reinsurance Holdings, Inc. reflects standard notching relative to the A1 insurance financial strength rating and is based on the expectation of ample credit support and dividend capacity from its principal operating subsidiary, Everest Reinsurance Company, as well as reinsurance support from the principal Bermuda operating company, Everest Reinsurance (Bermuda) Limited.
Moody’s has affirmed the following ratings:
Everest Reinsurance (Bermuda), Ltd. — insurance financial strength at A1,
Everest Reinsurance Company — insurance financial strength at A1,
Everest Reinsurance Holdings, Inc. — senior unsecured debt at Baa1; junior subordinated debt at Baa2(hyb).
Moody’s has assigned the following ratings:
Everest Reinsurance Holdings, Inc. – Guaranteed provisional senior unsecured shelf at (P)Baa1; Guaranteed provisional subordinated shelf at (P)Baa2.
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