Top Layer Reinsurance Ltd. 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 programs has had it’s rating outlook revised from negative to stable.
The rating has been reassessed by Standard & Poor’s after State Farm’s own rating outlook was revised to stable recently. Top Layer Re had been given a negative outlook back in March 2009. At the same time as upgrading the outlook on Top Layer Re, S&P have affirmed its ‘AA’ ratings.
Top Layer Re, underwrites non-U.S. catastrophe reinsurance and retrocessional reinsurance providing Rennaissance Re with a vehicle which can take on higher levels of a program than they would generally underwrite themselves. The joint venture is 50-50 owned between Rennaissance Re and State Farm. Top Layer Re is liable for the first $100m of losses that occur each year. S&P stress that this means the most Top Layer Re can lose in a calendar year is $100m even if it is exposed to multiple events.
“The ratings and outlook on Top Layer Re continue to rely solely on support from the company’s shareholders because we consider Top Layer Re more of an underwriting vehicle, and believe that it would not survive without parental support,” said S&P analyst Neil Stein.