A.M. Best Lowers Rating of Top Layer Reinsurance Ltd.Business Editors OLDWICK, N.J.--(BUSINESS WIRE)--March 3, 2003 A.M. Best Co. has lowered the financial strength rating to A+ (Superior) from A++ (Superior) of Top Layer Reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. Ltd. (Bermuda) and maintained a stable outlook on the company. The lowering of this rating is a result of the rating action recently taken by A.M. Best on State Farm Mutual Automobile Insurance Company (rated A++ (Superior)), a 50% joint owner of the company, along with Renaissance Reinsurance Ltd (rated A+ (Superior)). While A.M. Best affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the financial strength rating of A++ (Superior) of State Farm, a negative outlook was assigned to that company reflecting uncertainties relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc several issues, including its prospective operating performance and its significant exposure to equity market volatility. A.M. Best believes the credit quality of Top Layer's most significant backer has been modestly reduced and, as such, has lowered Top Layer's rating to below the A++ level. On a stand-alone basis, Top Layer is modestly capitalized Capitalized Recorded in asset accounts and then depreciated or amortized, as is appropriate for expenditures for items with useful lives longer than one year. respective to the high excess layers of property catastrophe Catastrophe, from the Greek Καταστροφή (katastrephein), literally means "to turn" (strephein) "downwards" (kata-). risks it assumes, and its rating is materially dependent upon reinsurance protections it receives from State Farm and--to a much lesser degree--RenaissanceRe. State Farm provides Top Layer with $3.9 billion excess of $100 million stop-loss reinsurance protection, which includes a cut-through agreement to meet policyholder Policyholder An individual who owns an insurance policy. obligations should Top Layer become insolvent INSOLVENT. This word has several meanings. It signifies a person whose estate is not sufficient to pay his debts. Civ. Code of Louisiana, art. 1980.. A person is also said to be insolvent, who is under a present inability to answer, in the ordinary course of business, the responsibility . Top Layer is also supported by letters of credit from State Farm and RenaissanceRe totaling $75 million and the ability to make a capital call to these companies each fiscal year for up to $100 million. Despite this action, the company's rating is still at the Superior level, reflecting the continued financial strength of State Farm along with Top Layer's track record of outstanding operating results attributable to RenaissanceRe, who underwrites all the risks undertaken by the company. Going forward, A.M. Best will continue to monitor Top Layer and the impact that any developments with State Farm may have on its rating. A.M. Best Co., established in 1899, is the world's oldest and most authoritative insurance rating and information source. For more information, visit A.M. Best's Web site at www.ambest.com. |
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