A.M. Best affirms credit ratings of AXA Global Re

A.M. Best has affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Rating of "aa-" of AXA Global Re (AGRe) (France). The outlook of these Credit Ratings (ratings) remains stable.

The ratings reflect AGRe's balance sheet strength, which A.M. Best categorises as adequate, as well as its adequate operating performance, neutral business profile and very strong enterprise risk management (ERM). The ratings also reflect AGRe's strategic importance to AXA S.A. (AXA), with the company benefiting from rating enhancement as a result. A.M. Best views AGRe as deeply integrated within the AXA group's underwriting operations and ERM function.

AGRe, formerly known as AXA Global P&C, was re-named following its absorption of AXA Global Life (AGL), the AXA group's reinsurance platform and centre of underwriting expertise for life and health business. Following the merger, which took place in December 2017 with retroactive effect to 1 January 2017, AXA subsidiaries' treaties are, as a rule, ceded to AGRe.

In A.M. Best's opinion, the merger serves to reiterate AGRe's strategic importance to AXA, and highlights the fundamental role of the entity in the optimisation of the AXA group's capital resources through internal risk transfer and the securing of external reinsurance placements for all business segments.

AGRe has a track record of solid non-life underwriting performance, as evidenced by a five-year average combined ratio of 95.9% (2012-2016). Whilst the life portfolio assumed from AGL has seen some earnings volatility in recent years, it is expected to only marginally impair AGRe's profitability over the short term considering its limited size. A.M. Best expects AGRe's operating performance to remain commensurate with the current adequate assessment over the coming years.

AGRe's adequate balance sheet strength factors in the company's solvency position as assessed by its internal capital model used for the purposes of Solvency II, together with its liquid investment portfolio and history of prudent reserving practices. AGRe further benefits from strong financial flexibility due to its importance to the AXA group, and A.M. Best expects that AXA S.A. would provide prompt and sufficient support to the company should it be needed. The balance sheet strength assessment also considers AGRe's dependence on retrocession, in line with its role as a captive reinsurance vehicle for the AXA group, and its appropriate retrocession programme, placed with a panel of financially strong partners.

AGRe's ERM is assessed as very strong, reflecting its deep integration within the AXA group's ERM framework.

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