AM Best Co has affirmed the financial strength rating of A- (Excellent) and the issuer credit rating of “a-”of Glacier Reinsurance AG. The outlook for both ratings remains stable.
AM Best said it believes that Glacier Re is likely to maintain its strong risk-adjusted capitalisation despite the impact of recent U.S. hurricane losses, which are expected to result in a significant net loss for the 2005 financial year.
In 2006, AM Best anticipates that a hardening of rates for most of the lines underwritten by Glacier Re is likely to result in substantial underwriting opportunities for the company.
The ratings agency said it believes that Glacier Re is likely to generate strong earnings, with an anticipated combined ratio below 70% in 2006, although its underwriting performance is subject to significant volatility due to the nature of the risks written, which includes a substantial exposure to natural catastrophes.
AM Best said the company's gross written premium is likely to be approximately $250m in 2005, rising to about $350m in 2006 due to increases in rates and new contracts.
An offsetting factor is the company's reliance on retrocessional protection. AM Best believes that the availability of retrocessional coverage to Glacier Re is likely to be restricted in 2006 and may therefore be an inhibiting factor in the company's development.
