Vermeer Reinsurance, the recently launched property catastrophe reinsurer created by RenaissanceRe and Dutch pension fund manager PGGM, has had a Financial Strength Rating of A (Excellent) and a Long-Term Issuer Credit Rating of “a+” assigned to it by AM Best.
The new reinsurer was set up as a joint venture and aims to provide capacity focused on risk remote layers in the US property catastrophe market. Vermeer will initially be capitalized with $600 million of funding from PGGM, with the option for another $400 million investment to pursue growth opportunities in 2019.
The outlook assigned to these Credit Ratings (ratings) is stable. The ratings reflect Vermeer’s balance sheet strength, which AM Best categorizes as very strong, as well as its adequate operating performance, neutral business profile and very strong enterprise risk management (ERM).
In addition to board control, RenaissanceRe owns 100 percent of the voting shares, and Renaissance Underwriting Managers (RUM) will manage Vermeer’s business including underwriting, pricing, risk selection, reserves, investments, claims, etc. Vermeer’s underwriting portfolio will be aligned with RenaissanceRe’s, as RenaissanceRe participates on every risk alongside Vermeer, AM Best noted.
The ratings assigned to Vermeer also reflect the strength and depth of RenaissanceRe’s management team and the ability of the company to deliver strong long-term profitability over the course of the re/insurance cycle, the agency said.
Partially offsetting these strengths is Vermeer’s startup status, its ability to be accepted in the market and its expected exposure to high severity losses associated with catastrophe events, AM Best said. In addition, the global reinsurance market, and specifically the property catastrophe segment, has experienced overcapacity and pricing pressures over the past few years that in turn has placed pressure on overall returns, the agency noted.
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