AM Best has affirmed the Long-Term Issuer Credit Rating (Long-Term ICR) of “a-” (Excellent) of W. R. Berkley Corporation (W. R. Berkley) (Greenwich, CT) [NYSE:WRB] and all associated Long-Term Issue Credit Ratings (Long-Term IRs) and indicative Long-Term IRs for securities issued by W. R. Berkley. At the same time, AM Best has affirmed the Financial Strength Rating (FSR) of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) of Berkley Insurance Company (BIC) (Wilmington, DE) and its reinsured subsidiaries and affiliates, collectively referred to as the W. R. Berkley Insurance Group (the Berkley Group). AM Best also has affirmed the FSR of A+ (Superior) and the Long-Term ICR of “aa-” (Superior) of Berkley Life and Health Insurance Company (Berkley Life and Health) (Urbandale, IA). The outlook of these Credit Ratings (ratings) is stable. (See below for a detailed list of the companies and ratings).
The ratings of the Berkley Group reflect its balance sheet strength, which AM Best assesses as strongest, as well as its strong operating performance, favorable business profile and appropriate enterprise risk management (ERM).
Berkley Group’s balance sheet strength is anchored by its risk-adjusted capitalization, which has consistently been at the strongest level as measured by Best’s Capital Adequacy Ratio (BCAR). The organization has demonstrated an ability to effectively access capital markets as needed and continues to report leverage and coverage metrics that are generally in line with industry composites, although unadjusted leverage is somewhat higher than peers at 34.1%. Consistent earnings and a trend of favorable cash flows offset any potential regarding Berkley Group’s current financial leverage metric. While the Berkley Group does have somewhat higher exposure to higher-risk assets, losses tied to these holdings have been minimal, a nod to their investment management expertise. In aggregate, the group’s loss reserves have developed favorably.
The Berkley Group’s favorable operating performance continues to reflect its strong operating metrics, with a trend of favorable returns on revenue and equity. Additionally, reduced expenses resulting from implementation of a remote work environment and the diversification of product and distribution allowed the group to maintain a steady stream of operating income despite the challenges of the COVID-19 pandemic and increased weather-related events in 2020. The organization continues to focus on expense efficiencies as well as innovative technologies to increase its competitive positioning as one of the top 20 U.S. property/casualty carriers in its core markets.
The ratings of Berkley Life and Health reflect its balance sheet strength, which AM Best assesses as strongest, adequate operating performance, neutral business profile and appropriate ERM, as well as the financial and operational support of the parent company.
Berkley Life and Health’s balance sheet strength assessment is supported by risk-adjusted capitalization at the strongest level, as measured by BCAR, as well as the company’s continued capital growth, maintenance of a high quality investment portfolio and favorable liquidity measures.
Berkley Life and Health has reported premium growth over the past several years; however, it reported a decline at year-end 2020 as the company reduced underperforming business and ceded a greater portion to reinsurance. The group captive business segment exceeded employer stop-loss business segment for the first time as the fastest growing and most profitable segment.
Berkley Life and Health maintains a market niche in the small group medical stop-loss space and is a market leader in the related benefits group captive market. However, the company operates in highly competitive medical stop-loss market dominated by larger national carriers. The company receives implicit and explicit support from W. R. Berkley and is fully integrated into the parent organization’s operations and strategic plans.
The FSR of A+ (Superior) and the Long-Term ICRs of “aa-” (Superior) have been affirmed with a stable outlook for the following members of the W. R. Berkley Insurance Group:
- Acadia Insurance Company
- Admiral Indemnity Company
- Admiral Insurance Company
- Berkley Casualty Company
- Berkley Assurance Company
- Berkley Insurance Company
- Berkley National Insurance Company
- Berkley Regional Insurance Company
- Berkley Specialty Insurance Company
- Carolina Casualty Insurance Company
- Clermont Insurance Company
- Continental Western Insurance Company
- Firemen’s Insurance Company of Washington, D.C.
- Gemini Insurance Company
- Great Divide Insurance Company
- Intrepid Insurance Company
- Key Risk Insurance Company
- Midwest Employers Casualty Company
- Nautilus Insurance Company
- Preferred Employers Insurance Company
- Queen’s Island Insurance Company, Ltd.
- Riverport Insurance Company
- StarNet Insurance Company
- Tri-State Insurance Company of Minnesota
- Union Insurance Company
- Union Standard Lloyds
- W. R. Berkley Europe AG
- Berkley International Seguros Mexico S.A.
- Berkley International Fianzas Mexico S.A.
