AM Best Withdraws Credit Ratings of Intercona Re AG

AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term Issuer Credit Rating of “aa-” Intercona Re AG (Intercona) (Switzerland). The outlook of these Credit Ratings (rating) is stable. Concurrently, AM Best has withdrawn the ratings as the company has requested to no longer participate in AM Best’s interactive rating process.

The ratings reflect Intercona’s balance sheet strength, which AM Best categorises as very strong, as well as its strong operating performance, neutral business profile and appropriate enterprise risk management. In addition, the ratings factor in rating enhancement, reflecting the stronger credit profile of its parent company, Nestlé, S.A.

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 is further supported by adequate liquidity and capital buffers, built up through the retention of earnings within its equalisation and fluctuation reserves.

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. AM Best’s expectation for the company’s audited 2018 results is for continued profit and improved underwriting performance.

Intercona’s business profile assessment reflects its role as the captive reinsurer of Nestlé, S.A. 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.

AM 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 AM 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 AM 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 AM Best press releases, please view Guide for Media - Proper Use of Best’s Credit Ratings and AM Best Rating Action Press Releases.

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