Reacting to developments at Everest Group and IQUW this week, AM Best has issued statements about the ratings of the two companies.

Everest Group Rating Affirmed But Outlook Revised

AM Best announced this week that it revised outlooks of various ratings for Everest Group to negative from stable after the group posted a third-quarter reserve charge of $478 million and took other strategic actions.

At the same time, Best affirmed the ratings, including:

• The A+ (superior) financial strength (FSR) and “aa-” (superior) long-term issuer credit ratings (ICRs) of the operating subsidiaries of Everest Group, Ltd. (Bermuda)
• The long-term ICRs of “a-” (excellent) of Everest Group, Ltd. and Everest Reinsurance Holdings, Inc. (Delaware)
• The long-term issue credit ratings (IRs) of Everest Reinsurance Holdings, Inc.

Explaining the outlook revisions, AM Best said it considered the elevated uncertainty surrounding the group’s business profile and enterprise risk management capabilities, in the light of the reserve charges. AM Best took note of the fact that the $478 million comes on top of $1.5 billion of adverse development reported in fourth-quarter 2024. Both reserving actions were largely driven by the group’s retail commercial portfolio.

Everest announced two strategic actions this week, which AM Best also considered. One was selling its retail commercial book of business through a renewal rights transaction with American International Group. The other was securing an adverse development cover on this book of business for accident years 2024 and prior.

Related article: Everest Refocusing as Reserve Charge Hits Earnings; Buying $1.2B ADC

While the strategic actions provide “more confidence that Everest’s prospective performance will return to historically stronger levels,” AM Best said the outlooks are negative because of the “heightened operational risk” the group faces in shifting its strategy to focus exclusively on its reinsurance and global specialty insurance segments.

Those segments today comprise more than 80 percent of the group’s business and have performed very well historically, Best noted, warning, however, that adverse development cropping up these remaining lines, “or challenges resulting from restructuring the current group to realign with its new focus, could increase negative pressure on the group’s ratings in the near term.”

Supporting the affirmations of the ratings, AM Best said the ratings reflect Everest’s balance sheet strength, which AM Best assesses as strongest, as well as its adequate operating performance, very favorable business profile and appropriate ERM.

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IQUW Under Review With Positive Implications

AM Best has placed the A- (excellent) FSR and “a-” (excellent) long-term ICR of IQUW Re Bermuda Limited (IQUW Re) under review with positive implications following the Oct. 29, announcement that Starr Insurance & Reinsurance Limited has entered into a definitive agreement to acquire IQUW group.

Related article: Starr Acquiring IQUW; Starr Managing Agency Among 10 Largest at Lloyd’s

IQUW Re is a wholly owned subsidiary of IQUW Holdings Bermuda Limited (IQUW), the ultimate holding company of the IQUW group. In addition, AM Best has placed under review with positive implications the long-term IR of “bbb-” (good) on $170 million senior unsecured notes, due 2035, issued by IQUW.

The Starr deal remains subject to regulatory approvals and closing conditions. In the meantime, the status of “under review with positive implications” reflects the potential financial and operational benefit that IQUW may derive from being part of a significantly larger insurance organization, which has greater financial strength, AM Best said.

Source: AM Best