A.M. Best has placed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-” of PaCRe, Ltd. (PaCRe) (Hamilton, Bermuda) under review with negative implications.
The under review status is a result of the shortfall in PaCRe’s overall performance relative to its original projected business plan, resulting from significant unrealized investment losses since inception relating to its alternative asset strategy. Although, the company has not achieved its projected premium volume, which is primarily due to the current competitive market conditions in property catastrophe reinsurance, it has produced positive underwriting results year over year, which is evidence of the solid underwriting and strong cycle management capabilities of the underwriting manager. The ratings will remain under review pending further discussions with management concerning the shortfalls in performance and what, if any, actions might be taken, as it regards underwriting and investment strategies going forward.
Rating factors that could result in negative rating actions include a continuation of significant investment losses, realized or unrealized, and/or an inability of the company to produce positive underwriting results.
Rating factors that could result in positive rating actions include strong investment returns and solid underwriting results with average to below-average volatility, while maintaining strong risk-adjusted capitalization.
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.
Key insurance criteria reports utilized:
- Risk Management and the Rating Process for Insurance Companies
- Understanding Universal BCAR
This press release relates to rating(s) that have been published on A.M. 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 visit A.M. Best’s Ratings & Criteria Center.
A.M. Best Company is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.
Copyright © 2015 by A.M. Best Company, Inc. ALL RIGHTS RESERVED.
