A.M. Best Affirms Ratings of Swiss Reinsurance Company Ltd and Swiss Re Corporate Solutions Ltd's U.S. Subsidiaries

A.M. Best Co. has affirmed the financial strength rating (FSR) of A+ (Superior) and issuer credit ratings (ICR) of "aa-" of the U.S. property/casualty subsidiaries of Swiss Reinsurance Company Ltd (Swiss Re) and Swiss Re Corporate Solutions Ltd (Swiss Re Corp) (both domiciled in Switzerland). A.M. Best also has affirmed the FSR of A+ (Superior) and ICR of "aa-" of Swiss Re's U.S. life/health subsidiary, Swiss Re Life & Health America Inc. (SRLHA) (Armonk, NY). The outlook for all ratings is stable. (Please see link below for a detailed listing of the companies and ratings.)

The ratings of SRLHA reflect its role as a key global operating subsidiary within the Swiss Re group. SRLHA operates as a marketer of life and health reinsurance solutions for the United States, an important global market for Swiss Re, whose life and health reinsurance segment generates approximately one-third of Swiss Re group's worldwide net earned premiums.

The ratings also reflect SRLHA's adequate risk-adjusted capital position and its leading market position in both the U.S. individual ordinary life and group life reinsurance segments. Furthermore, SRLHA increased its U.S. ordinary recurring reinsurance market share to 18.2% as of year-end 2012, while increasing assumed business production by 7% over the prior year. SRLHA increased its U.S. traditional group reinsurance in-force market share to 61% as of year-end 2012.

Offsetting these positive rating factors are the ongoing volatility inherent in SRLHA's statutory operating performance and balance sheet metrics. SRLHA possesses a transaction-oriented business model, which is supported by the use of parental and affiliate retrocession that has produced fluctuating financial results over the years. Furthermore, SRLHA has more recently encountered earnings challenges associated with its pre-2004 post level term U.S. business and its March 2013 recapture of yearly renewable term business that had been ceded to Berkshire Hathaway Inc. in 2010.

A.M. Best believes SRLHA is well positioned at its current rating level for the foreseeable future. Factors that could result in negative rating actions include a material change in A.M. Best's view of the strategic importance of SRLHA to Swiss Re and/or any negative rating actions taken by A.M. Best on Swiss Re.

The ratings of the U.S. property/casualty subsidiaries of Swiss Re and Swiss Re Corp, including Swiss Reinsurance America Corporation (New York, NY) and Westport Insurance Corporation (Jefferson City, MO), acknowledge their important role and integration into Swiss Re group's overall operations. Additionally, the ratings also reflect the U.S. property/casualty subsidiaries' robust risk-adjusted capitalization, strong operating performance and superior business profile.

These positive rating factors are partially offset by Swiss Re group, and by extension its U.S. property/casualty subsidiaries', significant exposure to natural and man-made catastrophes, as well as the continued impact of soft market conditions on growth opportunities and technical profitability in the global property/casualty reinsurance market.

A.M. Best also believes that the ratings of the U.S. property/casualty subsidiaries of Swiss Re and Swiss Re Corp are well positioned at their current level. Negative rating triggers could occur if there were a significant decline in the risk-adjusted capitalization or operating performance of the U.S. property/casualty subsidiaries. However, positive rating triggers could occur if the U.S. property/casualty subsidiaries' operating performance and risk-adjusted capitalization consistently outperforms their reinsurance peers.

For a complete listing of Swiss Reinsurance Company Ltd and Swiss Re Corporate Solutions Ltd's U.S. FSRs, ICRs, and debt ratings, please visit www.ambest.com/press/013102swissreus.pdf.

The methodology used in determining these ratings is Best's Credit Rating Methodology, which provides a comprehensive explanation of A.M. Best's rating process and contains the different rating criteria employed in the rating process. Best's Credit Rating Methodology can be found at www.ambest.com/ratings/methodology.

A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

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A.M. Best Co.
Robert Adams?L/H
Managing Senior Financial Analyst
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Scott Mangan?P/C
Financial Analyst
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Rachelle Morrow
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Jim Peavy
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