AM Best withdraws PaCRe ratings
Rating agency AM Best has withdrawn its ratings of Bermuda-based reinsurer PaCRe, the joint venture of Validus and Paulson & Co.
The rating agency affirmed PacRe’s financial strength rating of A- (Excellent) and a issuer credit rating of ‘a-‘ for PaCRe. The ratings have been removed from under review with negative implications and assigned a negative outlook.
The ratings were removed after PaCRe requested to no longer participate in AM Best’s interactive rating process.
The negative outlook was attributed to PaCRe business profile and the overall performance of its alternative asset strategy, which has deviated from its original projected business plan, according to the rating agency.
“However, it has produced positive underwriting results since inception, despite a few significant loss events, which is a testament to the solid underwriting and strong cycle management capabilities of the underwriting manager. Additionally, the alternative asset strategy has not performed as expected during PaCRe’s operating history producing unrealised investment losses,” said AM Best.
The rating agency added that although changes have been made to the investment strategy in an effort to reduce the volatility, “it will take time for these changes to inure to the benefit of PaCRe”.