AM Best has placed under review with developing implications the Financial Strength Rating (FSR) of A (Excellent) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “a” (Excellent) of Validus Reinsurance, Ltd. (Validus Re) (Hamilton, Bermuda) and Validus Reinsurance (Switzerland) Ltd. (Zurich, Switzerland), a subsidiary of Validus Holdings, Ltd. (Validus) (Hamilton, Bermuda) [NYSE:VR].
Concurrently, AM Best has commented that the Credit Ratings (ratings) of the remaining members of American International Group, Inc. (AIG) remain unchanged.
These rating actions follow the recently announced definitive agreement whereby AIG will sell Validus Re and Validus, including AlphaCat Managers Ltd. and the Talbot Treaty reinsurance business, to RenaissanceRe Holdings Ltd. (RenaissanceRe) [NYSE: RNR] for $2.99 billion, consisting of $2.74 billion in cash and $250 million in RenaissanceRe common shares. AIG is also expected to receive all capital in excess of $2.1 billion of shareholders’ equity of Validus Re and achieve future capital synergies of approximately $400 million from the recapture of reserves due to transferring the Validus Re balance sheet to RenaissanceRe, which together, as of Dec. 31, 2022, was over $1.5 billion. This brings the total estimated transaction value to more than $4.5 billion.
The transaction is expected to close in fourth-quarter 2023, subject to regulatory approvals and other customary closing conditions. Subsequent to the closing, AIG expects to make significant investments in RenaissanceRe’s DaVinci Reinsurance Ltd. and Fontana Reinsurance Ltd. managed funds through AIG’s investment portfolio.
The ratings will remain under review until the deal closes and AM Best completes its evaluation of organizational changes and strategic positioning within the new structure. The under review status may be updated in the interim period if new facts and circumstances present themselves.
This press release relates to Credit Ratings that have been published on AM Best’s website. For all rating information relating to the release and pertinent disclosures, including details of the office responsible for issuing each of the individual ratings referenced in this release, please see AM Best’s Recent Rating Activity web page. For additional information regarding the use and limitations of Credit Rating opinions, please view Guide to Best's Credit Ratings. For information on the proper use of Best’s Credit Ratings, Best’s Performance Assessments, Best’s Preliminary Credit Assessments and AM Best press releases, please view Guide to Proper Use of Best’s Ratings & Assessments.
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