A.M. Greatest Co. has upgraded the monetary strength rating (FSR) to ‘A (Excellent) from ‘A-’ (Superb) and issuer credit rating (ICR) to “a” from “a-” of New York-based AXA Insurance carrier.

Greatest has also affirmed the FSR of ‘B++’ (Great) and ICRs of “bbb” of Coliseum Reinsurance Organization and its wholly owned subsidiary, AXA Re Property and Casualty Insurance carrier - the U.S. affiliates of French insurer AXA S.A. that are in run off. The outlook for all ratings is stable. All of the companies are domiciled in Wilmington, DE, unless otherwise specified.

The ratings of AXA Insurance carrier reflect its “strong risk-adjusted capitalization, which can be supported by an extensive reinsurance program, its favorable liquidity and enhanced strategic importance to AXA,” Greatest noted.

“The company serves as AXA group’s primary domestic insurer of reverse flow business, representing the U.S. portion of multinational accounts produced primarily by the customers of AXA Corporate Solutions Assurance SA and AXA Versicherung AG. AXA Insurance carrier also provides 60 percent quota share reinsurance coverage for the really lucrative portfolio of its affiliate, AXA Art Insurance coverage Corporation (AXA Fine art), to much better make use of its capital.”

Best explained that the businesses act “essentially inside a fronting part, most business is reinsured to AXA Insurance coverage Company’s affiliates through quota share reinsurance agreements. While heavy reliance on affiliated reinsurance leads to higher ceded underwriting leverage, the company’s outstanding reinsurance recoverables are predominantly collateralized.”

Greatest also indicated that AXA Insurance carrier “benefits from the monetary flexibility with the AXA group. Whilst operating performance has historically been volatile,” Greatest said it “expects this performance to continue enhancing over the long term based on AXA Insurance coverage Company’s present and clearer strategy, along with its continued reinsurance protection.

“Operating overall performance in 2009 was adversely impacted by measures purposefully taken to cleanse the company’s balance sheet, such as write-offs of old reinsurance recoverables deemed uncollectible and changes in reserve balances also deemed uncollectible.

“These measures ought to cause results on a going forward basis to be a lot more reflective of AXA Insurance Company’s remaining core book of company, which may be performing favorably.

“Both Coliseum Re and AXA Re P&C remain in run off. In January 2007, AXA Re P&C entered into an aggregate quota share agreement with Coliseum Re, reinsuring 100 percent of the remaining net technical liabilities including any uncollectible insurance and reinsurance. Coliseum Re continues to maintain a solid level of capitalization and adequate liquidity relative to its run-off activities.”

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