Top Layer Re, the joint venture sidecar which was set up by Rennaissance Re and State Farm Mutual Automobile Insurance Company in 1999 to provide a vehicle to take only the very high layers of worldwide catastrophe reinsurance and retro programs, has had its ratings affirmed by A.M. Best. This despite the sidecar vehicle taking its first losses from the two earthquakes in New Zealand.
A.M. Best said the rating reflects the substantial support afforded to Top Layer Reinsurance Ltd. by its co-owners, highlighting the underwriting expertise of RenRe and substantial capital support and reinsurance protection afforded to it by State Farm.
The rating agency said that losses from the two New Zealand earthquakes were within Top Layer Re’s retention and the sidecar has performed in line with how it was designed. The losses trigger contractual agreements which call for State Farm and RenRe to replenish the sidecar’s capital.
Top Layer Re, with its longevity and track record of performance is becoming a good model for reinsurers who may be considering setting up a sidecar in the current market. It’s rating has only ever been affected by movements in one of its owners ratings and A.M. Best acknowledge that its ratings are largely dependent on those of its two owners.